SEC Charges Gemini & Genesis for Selling Unregistered Digital Asset Securities

• The United States Securities and Exchanges Commission has filed a charge against crypto exchange Gemini and crypto lending platform Genesis for offering and selling unregistered securities via Gemini’s Earn program.
• The complaint was filed in the U.S. District Court for the Southern District of New York for violating sections 5 (a) and 5 (c) of the Securities Act of 1933.
• Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

The United States Securities and Exchanges Commission (SEC) has filed a charge against crypto exchange Gemini and crypto lending platform Genesis for offering and selling unregistered securities via Gemini’s Earn program. The complaint was filed in the U.S. District Court for the Southern District of New York for violating sections 5 (a) and 5 (c) of the Securities Act of 1933.

The SEC’s action comes at the peak of Gemini and Genesis’ public fallout, which was caused by the Earn program. Through this unregistered offering, Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors. The program had 340,000 users and about $900 million in assets at the time of its suspension.

The genesis of the Earn program started in December 2020, when Genesis signed a deal with the crypto exchange. Gemini’s customers could loan their crypto to Genesis in exchange for interest, and Gemini, in return, received a fee of up to 4.29% on returns. However, this came crumbling down after Genesis suspended withdrawals as a result of FTX’s collapse. The money continues to remain locked and both platforms are yet to decide on a final solution.

Commenting on the charge, SEC Chairman Gary Gensler said, “Today’s action underscores that investors should be mindful of the risks associated with unregistered digital asset securities, including those offered and sold by entities located outside the United States. The SEC’s investigations into other entities and persons related to the alleged misconduct are still ongoing.”

Investors should be wary of the risks associated with unregistered digital asset securities and should invest cautiously. The SEC is continuing its investigations into other entities and persons related to the alleged misconduct.