March 27, 2024
Latest Cryptocurrency News

Genesis Agrees to Pay $21M Penalty in Gemini Settlement

Genesis Global Capital has agreed to settle accusations related to the Gemini Earn financing scheme by paying a $21 million civil penalty as part of a final court verdict. The deal comes in response to claims made against Genesis and Gemini over an unregistered securities offering. These claims stem from the introduction of the Gemini Earn cryptocurrency lending program for ordinary investors.

SEC Chairman Emphasizes Compliance with Securities Laws

Gary Gensler, chair of the United States Securities and Exchange Commission (SEC), stressed the importance of adherence to securities laws in a statement on March 19.

“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.”

SEC Chairperson, Gary Gensler

Gensler emphasized that compliance with securities laws is imperative for safeguarding investors and fostering trust in markets, reiterating that it is not optional but mandatory under the law.

Under the terms of the settlement, the SEC will receive a portion of the penalty after other bankruptcy payments have been fulfilled, including claims by retail investors affected by the Gemini Earn program.

The $21 million penalty signifies the conclusion of the SEC’s lawsuit against Gemini and Genesis initiated in January 2023 for the sale of unregistered securities through the Gemini Earn program.

Context and Previous Actions

Genesis suspended user withdrawals on its platform in November 2022, when Gemini Earn boasted approximately 340,000 customers and $900 million in assets under management, according to the SEC announcement.

This penalty comes on the heels of Gemini agreeing to pay a $37 million fine for multiple compliance failures, as explained by Superintendent Adrienne Harris of the New York State Department of Financial Services (NYDFS) in a statement on Feb. 28.

The settlement between Gemini and NYDFS requires Gemini to return at least $1.1 billion to customers of the Gemini Earn program through the Genesis bankruptcy proceeding. Gemini anticipates returning over $1.8 billion in value to users, should the bankruptcy court approve the settlement.

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