Gemini and Genesis charged by SEC for violating Securities law using the Earn program
|- Gemini and Genesis, according to the Securities and Exchange Commission, offered unregistered securities to the public.
- The SEC reiterated that crypto loading programs need to comply with securities law and seek civil penalties for Gemini and Genesis.
- Earlier this week, Gemini co-founder, Cameron Winklevoss, called Genesis parent company DCG’s CEO, Barry Silbert, unfit and terminated the Earn program partnership.
Gemini and Genesis have been making headlines for weeks following the withdrawal halt by Genesis in November 2022. Gemini CEO, Cameron Winklevoss, has been attempting to fix the situation by calling out Genesis parent company Digital Currency Group’s CEO, Barry Silbert, but to no avail. Now the Securities and Exchange Commission (SEC) has taken the matter into its own hands.
Gemini vs. Genesis vs. SEC
Gemini and Genesis, despite their differences, became the recipients of the SEC’s wrath as the regulatory authority charged the two companies with violation of the Securities law. According to the commission, both crypto service providers, through their Earn program, were offering unregistered securities to retail investors.
The Gemini Earn program was operated in partnership with Genesis, who carried out the process of generating revenue from customer deposits that were paid back as interest to users. The program attracted over 340,000 users who collectively deposited over $900 million in their accounts. Following the withdrawal halt, this money remained stuck with Genesis.
While on technical grounds, the onus of returning the customers’ funds remains on Genesis, the SEC is currently not looking to pursue that matter. The regulatory authority is keen on pursuing the violation of the law and alleged misconduct. Talking about the same SEC chair, Gary Gensler, stated,
“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. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
The SEC filed the complaint in the US District Court for the Southern District of New York on January 12 against both Gemini and Genesis. Through this complaint, the commission is seeking ‘permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.’
Gemini ends its relationship with Genesis
After failing to establish communication and common ground with Barry Silbert, Gemini's co-founder demanded the removal of the former from DCG. As per Winklevoss, Silbert was unfit and unreasonable as CEO and demanded his removal from the position.
Furthermore, Genesis also ended the Earn program partnership it had with Genesis. Informing their customers about the same in an e-mail on Tuesday. The crypto lender stated that the termination of the agreement would force Genesis and DCG to pay up the $900 million deposit to its users.
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