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SEC Sued Gemini And Genesis For Selling Unregistered Securities

  • SEC has charged Gemini and Genesis Global for raising billions of dollars by selling unregistered equity

  • Crypto lending platforms and other intermediaries need to comply with our time-tested securities laws, said Gary Gensler

  • The co-Founder of Gemini exchange termed these allegations as lame and counterproductive


13-Jan-2023 By: Shikha Jha
SEC Sued Gemini And

US regulators do not seem to be in any mood to lose their grip on crypto companies as they continue charging many of them with similar accusations. 

The Security Exchange Commission of the U.S. has charged Gemini Trust and Genesis Global Capital for raising billions of dollars by selling unregistered equity. These allegations and proposed investigation are regarding a Gemini exchange product that promised an eight percent return on their deposits.

Gemini Trust is a cryptocurrency exchange and custodian that provides multiple services to its users. On the other hand, Genesis Global Capital is a subsidiary of Digital Currency Group which is owned by Barry Silbert. 

According to SEC, Genesis lent out Gemini customer funds in the market and returned a fraction of earned profits back to Gemini. Those profits were further shorted with Gemini’s cut before finally reaching the customers. As per SEC regulations, Genesis should have registered the product under security offering with SEC. 

Gary Gensler, Chairman of the Security Exchange Commission of the U.S, while talking about these charges said, 

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws,” 

However, these allegations were not well received by Tyler Winklevoss, Co-Founder of Gemini. While sharing his utter disappointment with the charges forwarded by SEC on Gemini and Genesis, Tyler termed them as “super lame" and “manufactured parking ticket”. 

Tyler Winklevoss tweet

However, Tyler Winklevoss made it clear that they will continue the ‘important recovery’ that they are working on right now. On the other hand, there are severe concerns about the health of  Genesis Global after being hit terribly by the fall of Three Arrow Capital and FTX Exchange later. The speculations on its future are also soaring as Genesis has already hired Moelis & Company to restructure its business. 

This should also be noted that BlockFi, a crypto exchange based in the Bahamas, also had to face the same allegations from SEC last year. As an aftermath of which BlockFi decided to pay $50 million to settle the charges without accepting or denying any liabilities. 

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