WASHINGTON DC – Genesis Global Capital, LLC has agreed to pay a $21 million fine and accept a permanent injunction to resolve allegations by the Securities and Exchange Commission (SEC) that it offered and sold securities without proper registration. The agreement, announced today, concerns the company's participation in the Gemini Earn program, a cryptoasset lending initiative.
The SEC had previously charged Genesis and Gemini Trust Company, LLC on January 12, 2023 for their roles in the Gemini Earn program. The program allowed customers to lend their cryptocurrency assets to Genesis in exchange for paying interest. However, in November 2022, Genesis was unable to meet withdrawal requests due to insufficient liquidity amid market volatility, leaving around 340,000 investors without access to approximately $900 million in crypto assets.
As part of the settlement, Genesis has neither admitted nor denied the SEC's allegations, but has consented to the final ruling prohibiting the company from future violations of Section 5 of the Securities Act of 1933. The SEC emphasized that the Collapse of the Gemini Earn program highlighted the risks to investors when market participants circumvent federal securities laws.
SEC Chairman Gary Gensler highlighted the importance of compliance with securities laws for crypto lending platforms and other intermediaries, stating that it is crucial for investor protection and market confidence. Gurbir S. Grewal, Director of the SEC's Division of Enforcement, added that no amount of advocacy can replace the disclosures necessary for investor protection required by law.
Genesis, along with two affiliates, filed for Chapter 11 bankruptcy on January 19, 2023. The SEC settlement provides that the fine will be paid after the bankruptcy court resolves all other permitted claims, including those of retail investors in the Gemini Earn program. .
The SEC investigation and subsequent bankruptcy court litigation were conducted by one team of officials, and the ongoing district court litigation against Gemini is being led by another team within the SEC. The settlement with Genesis marks an ongoing effort by the SEC to enforce securities laws within the changing landscape of cryptocurrency markets, according to a press release.
This article was generated with the support of AI and reviewed by an editor. For more information consult our T&C.
