SEC charges Gemini, Genesis over Earn program; Winklevoss responds

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The U.S. Securities and Exchange Commission has charged Genesis and Gemini for the now-defunct Gemini Earn program, according to January 12 information. Presentation.

SEC Chairman Gary Gensler said:

Genesis and Gemini allege they circumvented disclosure requirements designed to protect investors by publicizing unregistered securities. Today’s charges are a clarification based on previous actions…crypto-lending platforms and other intermediaries must adhere to proven securities laws.

The SEC said the Earn program constitutes both an unregistered offer and a sale of securities. Regulators further claimed that Genesis and Gemini brought in billions of dollars worth of cryptocurrency from hundreds of thousands of users.

Genesis and Gemini signed an agreement in December 2020 and launched Gemini Earn in February 2021. The service allowed Gemini users to lend their assets to Genesis in exchange for interest on deposits through a tripartite agreement.

Genesis then suspended Earn’s withdrawal in November 2022, citing a lack of liquidity due to market conditions at the time of the FTX collapse. The SEC said that at the time withdrawals were suspended, Genesis Earn held $900 million worth of his crypto assets belonging to his 340,000 Gemini Earn users. This issue has generated a lot of controversy in recent months and is part of an SEC complaint today.

However, the SEC also drew attention to questionable practices Gemini performed while operating the service. Regulators said Gemini collected his as much as 4.29% agent fee. Gemini also alleged that it pooled investor Earn funds with other funds and invested those funds at its discretion.

The complaint filed by the SEC also suggests that the Gemini Earn Agreement was not registered with the SEC as required by federal securities laws. It further alleges that Gemini and Genesis made “selective and inappropriate disclosures” and said both companies publicly promoted Gemini Earn as an investment.

The SEC is seeking to block both companies from further violating certain securities regulations. It is also intended to waive or waive any ill-gotten gains by both companies and to pay interest and penalties on those gains. Today’s filing does not indicate exactly how much Genesis and Gemini may owe the SEC. Nor does it represent the exact services (if any) that the two companies may not be able to provide.

Earn users have been unable to withdraw their funds for two months, and the program was officially and permanently suspended on Tuesday. It is unclear whether the SEC’s action will help users recover funds in their accounts.

Tyler Winklevoss Answers

Tyler Winklevoss responded It said on Twitter that the SEC’s actions were deemed counterproductive and that no potential enforcement action was raised until withdrawals were suspended.he also mentioned

“Despite these ongoing conversations, the SEC has elected to announce the lawsuit to the media before informing us. It’s a shame they’re optimizing from a political standpoint instead of helping to force it.”

Posted In: Lending, Regulation

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