SEC Hits Genesis with $21 Million Penalty over Unregistered Crypto Lending Program


Genesis Global Capital, LLC has agreed to a $21
million penalty to settle charges brought against the firm by the Securities
and Exchange Commission (SEC). This matter involves allegations by the
regulator that the crypto lending platform offered unregistered securities to
the public.

The SEC accused Genesis of failing to register the
Gemini Earn program, a crypto lending product jointly managed with the
cryptocurrency exchange Gemini. The regulator maintains that the offering
breached the disclosure requirements designed to safeguard investors.

The SEC’s Chair, Gary Gensler, mentioned: “We
charged Genesis with failing to register its retail crypto lending product
before offering it to the public, bypassing essential disclosure requirements
designed to protect investors.”

“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.”

Genesis’ involvement in the Gemini Earn program, which
promised interest payments on crypto assets loaned to the company, attracted
substantial attention until its collapse in November 2022.

Genesis and Gemini Trust Company, LLC were charged by the SEC on
January 12, 2023. Subsequently, Genesis filed for bankruptcy following the
collapse of the Gemini Earn program, leaving investors unable to access their
assets. The SEC’s complaint, filed in the U.S. District Court
for the Southern District of New York, resulted in Genesis consenting to a
final judgment, including the $21 million civil penalty and a permanent
injunction.

Regulatory Response

Last month, Genesis settled fraud charges brought against
the firm by the New York Attorney General, Letitia James. These allegations
resulted from the Gemini Earn program, which purportedly defrauded $1.1 billion worth of customers’ funds.

According to James, the Gemini Earn program misled customers
and concealed significant financial losses. As part of the settlement , assets
designated for the state regulator were redirected to Gemini Earnโ€™s former
customers and other creditors of Genesis.

Earlier, Genesis Global Capitalโ€™s sister unit, Genesis
Global Trading, settled with the New York State Department of Financial
Services, paying hefty penalties for compliance failures. Moreover, the company
surrendered its BitLicense, which is essential for offering crypto services in
New York.

Genesis Global Capital, LLC has agreed to a $21
million penalty to settle charges brought against the firm by the Securities
and Exchange Commission (SEC). This matter involves allegations by the
regulator that the crypto lending platform offered unregistered securities to
the public.

The SEC accused Genesis of failing to register the
Gemini Earn program, a crypto lending product jointly managed with the
cryptocurrency exchange Gemini. The regulator maintains that the offering
breached the disclosure requirements designed to safeguard investors.

The SEC’s Chair, Gary Gensler, mentioned: “We
charged Genesis with failing to register its retail crypto lending product
before offering it to the public, bypassing essential disclosure requirements
designed to protect investors.”

“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.”

Genesis’ involvement in the Gemini Earn program, which
promised interest payments on crypto assets loaned to the company, attracted
substantial attention until its collapse in November 2022.

Genesis and Gemini Trust Company, LLC were charged by the SEC on
January 12, 2023. Subsequently, Genesis filed for bankruptcy following the
collapse of the Gemini Earn program, leaving investors unable to access their
assets. The SEC’s complaint, filed in the U.S. District Court
for the Southern District of New York, resulted in Genesis consenting to a
final judgment, including the $21 million civil penalty and a permanent
injunction.

Regulatory Response

Last month, Genesis settled fraud charges brought against
the firm by the New York Attorney General, Letitia James. These allegations
resulted from the Gemini Earn program, which purportedly defrauded $1.1 billion worth of customers’ funds.

According to James, the Gemini Earn program misled customers
and concealed significant financial losses. As part of the settlement , assets
designated for the state regulator were redirected to Gemini Earnโ€™s former
customers and other creditors of Genesis.

Earlier, Genesis Global Capitalโ€™s sister unit, Genesis
Global Trading, settled with the New York State Department of Financial
Services, paying hefty penalties for compliance failures. Moreover, the company
surrendered its BitLicense, which is essential for offering crypto services in
New York.



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