Bankrupt Genesis agrees to $21 million SEC fine over defunct Gemini Earn crypto lending violations News ▸ US ▸ Bankruptcy
Bankrupt Genesis agrees to $21 million SEC fine over defunct Gemini Earn crypto lending violations
Gemini crypto exchange already assured its Earn users that they would receive 100% of their digital assets back in kind.
2 min read
Updated: Mar. 19, 2024 at 7:24 pm UTC
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Bankrupt crypto lender Genesis Global has consented to a $21 million civil penalty tied to the now-defunct Gemini Earn lending initiative, according to a March 19 statement from the US SEC.
Under the settlement terms, the SEC will not be paid the penalty until Genesis satisfies all bankruptcy claims, including those from Gemini Earn investors.
This resolution, initially agreed upon in January, marks a pivotal moment for Genesis, allowing it to pivot its focus toward its ongoing bankruptcy proceedings.
Securities law violations
Gary Gensler, the SEC Chairman, said the failed investment program bypassed essential disclosure requirements designed to protect retail investors.
He added:
“Today’s settlement builds 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. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
Gurbir S. Grewal, the Director of SEC’s Division of Enforcement, furthered that Gemini Earn’s collapse highlights “the unknown risks that investors are exposed to when market participants fail to comply with the federal securities laws.”
Notably, the settlement is coming a few days after a US Court upheld the SEC’s argument that the lender and Gemini crypto exchange offered and sold securities via the Earn product under the Howey and Reves test.
Thus, this fine signifies the conclusion of the SEC’s lawsuit against the company.
Gemini Earn update
Last month, the Winklevoss twins-led crypto exchange Gemini assured its Earn users that they would receive “100% of their digital assets back in kind” following an in-principle agreement with bankrupt Genesis and other creditors of the failed lender.
In addition, the exchange also disclosed a settlement agreement with the New York State Department of Financial Services (NYDFS). As per the terms, Gemini commits to returning a minimum of $1.1 billion to customers enrolled in its Earn Program.
Moreover, the exchange will pay a penalty of $37 million due to its previous non-compliance with local regulations.
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Posted In: US, Bankruptcy
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In this article
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerage providing a single point of access for select qualified individuals and global institutional investors.
Gary Gensler is an American government official and former investment banker who President Joseph Biden nominated to chair the U.S.
Cameron Winklevoss, a renowned figure in the cryptocurrency sector, is a Harvard University graduate with a degree in Economics and holds an MBA from Oxford University.
Tyler Winklevoss, known for his pioneering role in the cryptocurrency realm, is a Harvard University alumnus with a degree in Economics and holds an MBA from Oxford University.
