Genesis Agrees To Pay $21 Million Fine To The SEC
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Genesis Global Capital, a bankrupt cryptocurrency lender, has agreed to pay a fine of $21 million to the U.S. Securities and Exchange Commission (SEC). The fine will be used to settle the SEC charges concerning the Gemini Earn lending program.
The Gemini Earn program was established by the Gemini exchange. It allows investors to receive 7% APY interest through its interest-earning program. Gemini collaborated with Genesis for the Earn product, as its lending partner.
Gary Gensler, the Securities and Exchange Commission chairman, highlighted the regulatory enforcement. He mentioned that the agency charged Genesis with the failure to register its crypto-lending product before giving it to the public. The lender has bypassed the mandatory disclosure criteria designed to protect investors, he said.
Genesis Paused All Customer Withdrawals In 2022
After the implosion of FTX in November 2022, Genesis paused all withdrawals from Gemini Earn users. This froze the assets of many Earn customers. During the period, Gemini Earn users had about $900 million in assets closed up in Genesis.
According to the press announcement, the $21 million fine will only be paid to the Securities and Exchange Commission after all remaining claims have been settled. These claims should be satisfied in the current Chapter 11 bankruptcy proceeding. One claim that should be fulfilled before settling the penalty is that Gemini Earn investors are completely compensated.
Genesis did not admit or deny the SEC’s allegations. Moreover, this penalty could create a standard on charges involving unregistered securities for other crypto exchanges. The firm has planned to repay its Gemini Earn investors.
The Company Aims To Pay Back $1.1 Billion To Its Earn Customers
The lender promises to release about $1.1 billion on February 28. According to the firm’s report, investors will get back 100% of their crypto assets and potentially other bonuses.
The company explained further, revealing that if an investor places one bitcoin in its Earn program, that individual will get back one bitcoin. It also means that everyone who lent into the program will receive appreciation for their assets.
In addition to the firm’s quest to pay all customers, it has also revealed that if approved, it will return more than $1.8 billion in value to customers at the current price. The previous price at the time when Genesis paused withdrawal on November 16 was $700 million less.
The payment to the Securities and Exchange Commission comes several weeks after the firm made a settlement with the New York Attorney General (NYAG). Last year, the NYAG charged DCG, Gemini, and Genesis. Letitia James, the Attorney General claimed that these companies participated in fraudulent conspiracies involving Gemini’s Earn product.
