Genesis Global Capital, LLC has settled charges filed by the Securities and Exchange Commission (SEC) that emerged due to the Commission’s claims that its Gemini Earn program involved the sales of securities. The Earn program, powered by Genesis, allowed crypto investors to generate income while parking their digital assets with Gemini. The SEC charged Genesis, as well as Gemini Trust Company, LLC, with the sales of unregistered securities on January 12, 2023.
Genesis filed for Chapter 11 bankruptcy in January 2023 following a dramatic collapse in crypto markets. Investors haven’t been able to access or withdraw the crypto they invested with Genesis via Gemini Earn. The SEC said it will not receive any portion of the penalty until after the bankruptcy court pays all other allowed claims.
SEC Chairman Gary Gensler issued the following statement on the settlement:
“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.”
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said the enforcement action makes clear that no amount of hype can substitute for the investor-protection disclosures required by the federal securities laws.
The SEC noted there is ongoing litigation in regard to Gemini.