More Trouble For Winklevoss Brothers As SEC Sues Over 'Gemini Earn' Program
The Securities and Exchange Commission (SEC) sued crypto firms Genesis Global Capital and Gemini for offering and selling unregistered securities to investors through the Gemini Earn crypto lending program, just a day after crypto exchange Gemini terminated its flagship Earn program over a dispute with crypto lender Genesis.
Genesis and Gemini partnered in February 2021 to offer a Gemini lending product called Earn, which offered customers yields of up to 8%. Genesis lent Gemini users' crypto and returned a portion of the profits to Gemini after deducting an agent fee of sometimes over 4%, according to the filing in Manhattan federal court. SEC officials said Genesis failed to register that product as a securities offering.
“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws,” said SEC chair Gary Gensler in a statement.
Gemini, founded by the Winklevoss twins, and Genesis, owned by Barry Silbert's Digital Currency Group, are fighting over the fate of $900 million in customer funds afterthe FTX collapse.
Due to FTX's bankruptcy in November 2022, Genesis suspended new loans and redemptions as its $175 million in assets were locked up on the failed crypto exchange. After hearing the news, Gemini announced that there would be withdrawal delays for its Earn product, in which Genesis was a lending partner.
Now Genesis is on the verge of bankruptcy after struggling to raise $1 billion, resulting in a dispute with Gemini accusing Genesis of misleading its more than 340,000 clients. Due to a high-profile spat with Genenis's parent company Digital Currency Group over frozen
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