According to the official announcement made by the SEC, Genesis Global Capital will pay a $21 mn penalty after pleading guilty to charges that it engaged in the unregistered offer and sale of securities through a cryptocurrency.
In January 2023, the US Securities and Exchange Commission (SEC) accused and sued cryptocurrency firms Genesis and Gemini for allegedly selling unregistered securities in connection with a high-yield product offered to depositors.
According to the SEC, Genesis borrowed Gemini users’ crypto and sent a portion of the profits back to Gemini, which then deducted a brokerage fee of sometimes over 4% and returned the remaining profits to its users.
SEC officials had said Genesis was required to register this product as a securities offering.
The SEC said the penalty’s money would first be used to pay any other claims authorized by the bankruptcy court, including claims from retail investors in the Gemini Earn program, and then take the remainder.
We sued Genesis, accusing it of failing to register its retail crypto lending product before offering it public, bypassing basic disclosure requirements designed to protect investors.
Gary Gensler, SEC Chairman
“Today’s agreement builds on previous actions taken to make clear to the market and investors that cryptocurrency lending platforms and other intermediaries must comply with our time-tested securities laws. Doing this best protects investors. It increases confidence in the markets. It is not optional. This is the law”, SEC Chairman Gary Gensler said in the statement.
In addition to the fine, the SEC also agreed to a final order permanently enjoining Genesis from violating Section 5 of the Securities Act.
by Peter Sonner
