News

Genesis and Gemini Face SEC Lawsuit for Unregistered Securities Offering

The SEC has filed charges against crypto exchange Gemini

The United States Securities and Exchange Commission (SEC) has filed charges against crypto exchange Gemini and its partner, crypto lender Genesis, for allegedly selling unregistered securities through Gemini’s “Earn” program.

The SEC claims that Earn, which was introduced in February 2021 and remained in operation until January 2022, enabled the companies to obtain billions of dollars from hundreds of thousands of investors without proper registration.

Through a partnership with Genesis, a subsidiary of Digital Currency Group, customers of Gemini were able to earn yield by lending their cryptocurrency to the market-making firm.

The SEC alleges that the companies misrepresented their business model by advertising returns of up to 8% to customers without registering as a lending partnership with the appropriate authorities.

As a result of the charges, Gemini co-founder Cameron Winklevoss claims that Genesis owes $900 million to 340,000 Gemini Earn users.

Due to liquidity issues, withdrawals were frozen on the platform, causing significant harm to the approximately 340,000 investors who participated in the program.

The SEC claims that the charges are a reminder to the crypto industry that they must comply with securities laws.

However, Winklevoss has defended the company, calling the SEC’s actions “super lame” and “counterproductive.”

He also claims that the Earn program was regulated by the New York Department of Financial Services and that the SEC never raised any enforcement action until after withdrawals were frozen in November 2021.

Tags

Roland is a Public Relations & Communications guru with an immense passion for the blockchain and crypto industry. A fusion of his expertise and passion led to the dawn of Optimisus in 2020.