• The SEC has filed a complaint against Gemini and Genesis for allegedly selling unregistered securities to US retail investors through the Gemini Earn crypto asset lending program.
• The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, plus front-end interest and civil penalties from both companies.
• Both companies have raised billions of dollars by offering and selling securities to US investors through the Gemini Earn program.
The Securities and Exchange Commission (SEC) has recently taken action against two cryptocurrency companies, Gemini Trust Company and Genesis Global Capital, for allegedly offering unregistered securities to US retail investors. Through their Gemini Earn program, the two companies have collectively raised billions of dollars by offering and selling securities to US investors.
The SEC has filed a complaint against both companies, seeking permanent injunctive relief, disgorgement of ill-gotten gains, plus front-end interest and civil penalties. According to the SEC’s complaint, Gemini and Genesis sold unregistered securities through the Gemini Earn crypto asset lending program. The program allowed US investors to earn interest on their cryptocurrency holdings by lending them to Genesis, and then earning a share of the interest received by Genesis in return.
The SEC’s complaint alleges that both companies violated the registration requirements of the federal securities laws by offering and selling unregistered securities. Furthermore, the complaint alleges that Gemini and Genesis failed to adequately disclose the risks associated with the Gemini Earn program, such as the potential for losses or declines in the value of the digital assets held by Genesis.
In response to the SEC’s complaint, both companies have stated that they believe their actions were legal and compliant with applicable law. They also stated that they are committed to working with the SEC to resolve the matter.
The SEC’s action serves as a warning to all companies in the cryptocurrency space that offering and selling unregistered securities is not acceptable and will not be tolerated. Companies must ensure that they comply with all applicable laws and regulations governing the offering and sale of securities, as well as properly disclosing the risks associated with their products and services. Failure to do so can result in serious legal consequences.