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Breaking News: Billionaire VC Tim Draper Tells Businesses To Keep Payroll In Bitcoin
SEC Charges Genesis And Crypto Exchange Gemini For Offering Unregistered Securities
Advertisement

SEC Charges Genesis And Crypto Exchange Gemini For Offering Unregistered Securities

David Atlee by David Atlee
2 months ago
in Crypto News
0
Advertisement

The U.S. Securities and Exchange Commission has filed charges against crypto lender Gemini and Genesis for selling unregistered securities through Gemini’s “Earn” scheme.

The SEC claims that Earn enabled Genesis and Gemini to obtain billions of dollars from hundreds of thousands of investors through these unregistered offers.

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Genesis And Gemini Partnership

Earn was introduced by Gemini in February 2021 and remained in operation until January 8 of the following year.

As a result of a partnership with the cryptocurrency lender and subsidiary of Digital Currency Group (DCG), Genesis, customers of Gemini were given the opportunity to earn yield by lending their cryptocurrency to the market-making firm.

The SEC said the firms misrepresented their business model by advertising returns of up to 8% to its clientele without registering as a lending partnership with the appropriate authorities.

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According to open letters written by the co-founder of Gemini Earn, Cameron Winklevoss, Genesis owes $900 million to 340,000 Gemini Earn users.

Genesis Withdrawals And SEC Crackdown

As the FTX turmoil sent shockwaves to the crypto market last year, Genesis paused the withdrawals on the platform due to insufficient liquidity.

“The U.S. retail investors who participated in the Gemini Earn program have suffered significant harm,” claims SEC. Approximately 340,000 investors lost funds due to the freeze in withdrawals.

“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,” says SEC chair Gary Gensler.

Gemini Co-founder Marks SEC Actions As ‘Counterproductive’

In response to the SEC charges against the crypto exchange, Cameron Winklevoss defended the firm by claiming that the exchange is working hard to recover investor’s funds and called the SEC’s actions as “super lame” and “counterproductive.”

“As a matter of background, the Earn program was regulated by the @NYDFS and we’ve been in discussions with the SEC about the Earn program for more than 17 months. They never raised the prospect of any enforcement action until AFTER Genesis paused withdrawals on November 16th” said Tyler Winklevoss.

Related Reading: Binance Gets Thumbs Up To Trade Crypto In Sweden As Part Of European Push

According to the co-founder, Gemini will defend itself against the SEC claims he described as “parking ticket.” And to wrap up his defense, Tyler hailed Bitcoin and wrote this:

7/ Oh, and on a more positive note, bitcoin hit 19k today! Onward!

— Tyler Winklevoss (@tyler) January 12, 2023

SEC Charges Genesis And Crypto Exchange Gemini For Offering Unregistered Securities
Bitcoin price grows in the last 24 hours l BTCUSDT on Tradingview.com

The crackdown on Gemini and Genesis means that the SEC is taking precautionary measures to prevent frauds like FTX from happening again.

Meanwhile, the SEC is also looking into whether or not other companies or people are connected to the alleged misbehavior, as well as whether or not any other securities-law breaches were committed.

-Cover image from Pixabay and Bitcoin chart from Tradingview.com.

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