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Genesis Global Capital Agrees to $21 Million Fine in SEC Settlement
Bankrupt cryptocurrency lender Genesis Global Capital has reached a final court judgement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a $21 million fine. The penalty is related to the Gemini Earn program, a partnership between Gemini exchange and Genesis.
Reason for SEC Penalty
The SEC charged Genesis with failing to register its retail crypto lending product before offering it to the public, violating essential disclosure requirements meant to protect investors.
Suspension of Gemini Earn and Settlement Terms
In November 2022, Genesis paused withdrawals from Gemini Earn customers following issues with FTX, resulting in approximately $900 million in assets being locked up. The settlement with the SEC concludes over 14 months of court proceedings, with Genesis agreeing to a permanent ruling prohibiting future violations of registration provisions in federal securities laws.
Industry Impact and Investor Repayment
The $21 million civil penalty will be paid to the SEC after all claims are satisfied in the ongoing bankruptcy proceeding, ensuring Gemini Earn investors are made whole. Genesis also disclosed plans to refund over $1.1 billion to investors, providing them with 100% of their crypto assets and potential bonuses.
This settlement follows a previous agreement with the New York Attorney General, where DCG, Genesis, and Gemini were sued for fraudulent schemes related to Gemini’s Earn product. DCG, Genesis’ parent company, opposed the settlement, emphasizing the importance of fair distribution of assets.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
