Genesis and Gemini: SEC Takes Action
US financial watchdog the SEC (Securities and Exchange Commission) has filed charges against crypto lending firms Gemini and Genesis.
On 12 January, SEC sued the firms over their crypto lending product, Earn, for allegedly breaching investor protection laws.
The Gemini SEC lawsuit
The Gemini SEC civil lawsuit has been filed in the Federal Court of Manhattan. As per the SEC, both companies did not register their product before offering them to individual investors. The regulator claims that the Earn program has been used to sell unregistered securities.
The crypto lending program allowed the exchange’s customers to lend their assets to Genesis to earn up to 8% interest. The crypto exchange also profited by charging a fee of around 4.29% through this program.
Both these partner firms are under scrutiny after Genesis paused withdrawals unexpectedly in November. Interestingly, it happened right after the FTX exchange crashed. As per the SEC, at that time, the cryptocurrency lending program had more than $900 million worth of crypto assets of their customers. With this lawsuit, the commission is looking to recover illegal profits and fines for the offence.
Tyler Winklevoss's statement on Gemini SEC charges
Soon after the Gemini SEC lawsuit was filed, Gemini’s co-founder, Tyler Winklevoss, issued a statement via Twitter. He said, "We look forward to defending ourselves against this manufactured parking ticket...".
He also showed his resolve to continue work to recover customers' assets.
On the other hand, Genesis Global Capital is yet to comment on the issue.
Since the pause of withdrawals, the lending partner has been seeking ways to recover. However, the Wall Street Journal recently reported that the firm might have to file for Chapter 11 bankruptcy. The firm has already laid off more than 30% of its workforce in the last week.
Gemini and Genesis have ties with the fallen exchange, FTX, and have been in losses since its decline.
Author: Wasay Ali
Wasay Ali is a versatile professional writer with global experience and a background in mechanical engineering and social science. He is adept at crafting news and informational content for the crypto space and has experience writing for other niches. He is a professional SEO content writer who has worked with several digital marketing agencies and clients in the US, UK, Pakistan, and Europe. He is a dedicated volunteer and enjoys reading, writing, poetry, and going to the gym. He is an INFJ-A personality type dedicated to positively impacting the world. Wasay has a passion for writing as it allows him to express his creativity, share his knowledge, and connect with people worldwide.