Genesis Fined $21 Million After SEC Charges
In a settlement with the US Securities and Exchange Commission (SEC), Genesis Global Capital, LLC, has agreed to a final judgment with a $21 million civil penalty.
This resolution stems from charges related to the unregistered offer and sale of securities through its crypto asset lending program, Gemini Earn.
Genesis Agrees to Pay $21 Million Penalty
SEC Chair Gary Gensler emphasized the necessity for crypto companies to adhere to regulatory standards. He highlighted the settlement as a reinforcement of the principle that crypto lending platforms must comply with securities laws.
“We charged Genesis with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors… 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,” Gensler emphasized.
The charges date back to the SEC’s allegations against Genesis and Gemini for their roles in the Gemini Earn program. Investors were enticed by the promise of interest earnings on their loaned crypto assets to Genesis. However, the program’s collapse in November 2022 was triggered by a lack of liquidity to meet withdrawal requests.
Adding to the complexity, Genesis and its two affiliates sought Chapter 11 bankruptcy protection in January 2023. This left approximately 340,000 investors without access to their crypto assets worth an estimated $900 million.
Read more: Top 6 DeFi Lending Platforms
This settlement marks a significant step in the SEC’s broader efforts to bring clarity and security to the cryptomarket. By enforcing compliance with established securities laws, the SEC aims to mitigate the risks associated with crypto investments and ensure a stable, transparent, and trustworthy marketplace for investors.
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