The United States Securities and Exchange Commission (SEC) charged Gemini, a cryptocurrency exchange, and Genesis Global Capital, a cryptocurrency lending company, on January 12 over the fact that they marketed unregistered securities through the exchange’s “Earn” program.
The SEC filed a complaint with the Southern District of New York U.S. District Court. The Gemini Earn program comprises an offer and sale of securities, according to the SEC’s lawsuit, which argues it ought to be registered with the agency.
Gary Gensler, the head of SEC stated that “We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors.”
He further adds:
“It’s not optional. It’s the law.”
Notably, Gemini and Genesis agreed to a contract in December 2020 to make the yield-bearing cryptocurrency product available to the exchange’s users. This then began in February 2021 and officially ran until January 8.
According to this deal, Gemini clients could lend their cryptocurrency to Genesis under the agreement, with the guarantee that Genesis would reimburse the loan with interest.
However, On November 16, Genesis halted withdrawals after indicating that roughly $175 million was held at FTX and citing “unprecedented market turmoil.”
Gemini co-founder Cameron Winklevoss has informed that the Gemini Earn program had more than 340,000 subscribers. All unclaimed assets from the Earn program are anticipated to be returned by Genesis.
Gemini Co-founder Criticized SEC Charges
The co-founder of the cryptocurrency exchange Gemini, Tyler Winklevoss, has criticized the regulatory body for accusing the exchange of providing unregistered securities and referred to the accusations as “super lame” and “a manufactured parking ticket.”
Winklevoss expressed his dissatisfaction with the Securities and Exchange Commission’s accusations and took it to twitter, on January 12 and said the regulator was “optimizing for political points.”
“This action does nothing to further our efforts and help Earn users get their assets back. Their behavior is totally counterproductive.”