Investing.com – The Securities and Exchange Commission sued crypto giant Genesis lending arm Genesis Global Capital and digital currency exchange Gemini on Thursday for unregistered offering and selling of securities to clients through a interest-bearing product. The SEC said the companies have raised billions of dollars in crypto assets through the unregistered Gemini Earn program.
“We allege that Genesis and Gemini offered unregistered securities to the public, circumventing disclosure requirements designed to protect investors. Today’s charges build on previous actions to make it clear to the market and the public investor that crypto lending platforms and other intermediaries must comply with our proven securities laws. In doing so, they best protect investors. This promotes confidence in the markets. It is not optional. is the law”.
Gemini, led by the Winklevoss twins, launched its Earn program in February 2021, which allows users to lend their cryptocurrencies to institutional borrowers in exchange for interest on the assets. It partnered with Genesis for this program.
But following the implosion of the FTX crypto exchange in November, Genesis’ lending arm halted client withdrawals, leaving the equivalent of $900 million belonging to Gemini clients stranded on the platform. .
The lending business, which is owned by crypto conglomerate Digital Currency Group, has experienced a severe liquidity crunch due to its exposure to FTX and a flurry of withdrawal requests.