According to the Friday release, the US Securities and Exchange Commission has sued Genesis Global Capital, and Gemini Trust Company for offering unregistered securities to retail investors through the Gemini earn crypto asset program.
The release noted that Gemini and Genesis through the earning program raised billions of dollars worth of crypto assets from hundreds of thousands of investors.
More investigation is ongoing regarding the persons involved and also on whether or not both parties violated other securities laws.
“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” said SEC Chair Gary Gensler. “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. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
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Gemini Joins Forces With Genesis to Offer Crypto Earn Program
As per the SEC release, Genesis, an arm of Digital Currency Group partnered with Gemini Trust in December 2020 to offer customers of Gemini a chance to loan their assets to Genesis which Genesis agreed to pay interest on.
Fast forward to February 2021, both parties started offering the Gemini Earn Program to customers, with Gemini acting as an agent that facilitates the transaction and deducts a certain percentage from the returns paid to investors by Genesis.
Genesis however furthered by exercising its discretion in how to use investors’ crypto assets to generate revenue and pay interest to Gemini Earn investors.
However, in November last year, Genesis confirmed a halt in the withdrawal process on its Gemini Earn Program, citing insufficient liquid assets to meet withdrawal demands due to crypto market conditions which as of then, Genesis was holding nearly $900 million in investor assets.
Meanwhile, days ago, Gemini terminated its Earn Program, and hitherto, customers have not been able to withdraw their assets.
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