The US Securities and Exchange Commission bags another legal battle against another crypto linked company. The SEC in the new release shared that Genesis Global Capital, LLC has agreed to settle charges set by the commission. The crypto trading service provider would be paying $21 million in civil penalties.
SEC bags another win
According to the release, the settlement between SEC and Gemini will resolve the allegations that the exchange was engaged in the unregistered offer and sale of securities. It was carried out by its crypto asset lending program, the Gemini Earn program.
It mentioned that the SEC accused Genesis of failing to register its retail crypto lending product before offering it to the public. It didn’t disclose the essential requirements designed to protect investors.
US SEC chair Gary Gensler in a statement mentioned the importance of compliance with securities laws. He stated that the failure to do so not only put investor protection at risk but also breaks trust in the market.
The complaint filed by the SEC shows that the Gemini Earn program presented itself as an investment opportunity. It tried to provide a platform where customers, including retail investors in the US, loaned their crypto assets to the platform in exchange for promised interest payments.
However, in November 2022, the exchange announced that it could not allow investors to withdraw their assets. This happened due to insufficient liquidity following market volatility. Such action had raised concerns over the safety of investors’ funds. At the time, Genesis was holding around $900 million worth of crypto assets of around 340K earned investors.
Is watchdog making crypto industry clean?
It is important to note that Genesis and its affiliates filed for voluntary Chapter 11 bankruptcy protection back in January 2023. This increased complicating the situation for investors who were unable to access or withdraw their crypto assets.
This major settlement news came in when the commission saw humiliating actions in the Debt box crypto case. A US district court imposed sanctions on the US SEC. It stated that the watchdog acted in bad faith in the lawsuit.
With this case coming to a settlement end, the crypto community is now waiting for a closure of the Ripple vs SEC case. The long running case has received a summary judgment which gave the commission a partial win. It is expected that a conclusion in the XRP case would lead the crypto industry to a much-needed clarity.
