Genesis Global settles with the SEC by agreeing to pay a $21m fine
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Digital Currency Group’s subsidiary, Genesis Global Holdco, recently managed to reach a settlement with the US Securities and Exchange Commission (SEC) and resolve a lawsuit brought up against it a year ago. According to a recent court filing in the US Bankruptcy Court for the Southern District of New York, Genesis will have to pay a $21 million fine in order to resolve the matter.
Genesis agrees to pay $21 million to reach a settlement
The lawsuit was brought up by the SEC last year, and it revolves around a lending program that involves not only Genesis, but also Gemini Trust Company. The US SEC charged both firms for the unregistered offer and sale of assets that were considered securities, and which the two companies offered to retail investors via a crypto lending program.
Of course, the SEC’s stance toward cryptocurrencies is well known, and the regulator still considers most assets to be securities. As a result, it did not hesitate to file a lawsuit against the firms. Now, however, it has managed to reach a settlement with Genesis, but in a new filing, it said that this was only possible thanks to comprehensive negotiations between the agency and Genesis Global Capital.
The agreement will supposedly bring a number of benefits to the debtors’ estates, one of which is the resolution of the civil action claim that the SEC filed in the Chapter 11 Cases. Apart from that, the settlement will also help eliminate expenses, risks, and uncertainties tied to extended litigation against the regulator.
According to the court document, the $21 million settlement will be paid only after all other allowed administrative expenses, secured, priority, and general unsecured claims have been fully settled.
A string of related lawsuits
The news of the court case’s resolution came soon after Genesis Global Trading managed to settle with the New York Department of Financial Services (NYDFS). This settlement saw the company agreeing to pay an $8 million fine, in addition to agreeing to cease all of its operations in the state of New York.
The settlement also requires the US-focused crypto trading business to surrender its BitLicense six years after initially obtaining it in 2018.
However, the issues did not only affect Genesis’ own business. The firm’s bankruptcy also had a rather strong impact on the Gemini Earn program, which also led to a series of lawsuits. One of them was filed by Gemini against Digital Currency Group, as well as its CEO, Barry Silbert, accusing the executive and his platform of conducting fraud. Genesis sued DCG as well, requesting to be repaid for loans exceeding $600 million.
The SEC got involved soon after, accusing both platforms of selling securities, while the New York Attorney General filed a lawsuit against both of these firms, and DCG as the third one, accusing them all of defrauding investors.
