Genesis settles SEC lawsuit over crypto lending program
written by Bella Palmer
The SEC sued Genesis the week before it filed for bankruptcy protection in January 2023, claiming that Genesis and crypto currency exchange Gemini Trust illegally sold securities to hundreds of thousands of investors through their crypto lending program, Gemini Earn
Crypto lender Genesis Global has settled a U.S. Securities and Exchange Commission (SEC) lawsuit over its discontinued Gemini Earn lending program, agreeing to a $21 million fine that will be paid only if Genesis is able to fully repay customers in its bankruptcy.
The deal will help Genesis avoid the costs and risks of defending itself from an SEC lawsuit that had accused the firm of illegally selling securities. The settlement will allow Genesis to focus on repaying customers and other creditors, as per documents filed in U.S. Bankruptcy Court in Manhattan on Wednesday evening.
Genesis did not admit or deny wrongdoing in the settlement agreement.
The Securities and Exchange Commission sued Genesis the week before it filed for bankruptcy protection in January 2023, claiming that Genesis and crypto currency exchange Gemini Trust illegally sold securities to hundreds of thousands of investors through their jointly-managed crypto lending program, Gemini Earn.
The two firms partnered in December 2020 to allow Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, eventually collecting billions of dollars' worth of crypto assets from investors.
The Earn program was halted during a crypto market crash in November 2023, and its failure has prompted litigation between Genesis, Gemini, and Genesis's parent firm, Digital Currency Group. Gemini, run by the Winklevoss twins best known for their legal battle against Meta Platforms' CEO Mark Zuckerberg, had earlier sued DCG over the failure of the firms' crypto lending partnership.
Apart from the SEC lawsuit, the three firms face a similar enforcement action by New York Attorney General Letitia James, who seeks to bar all three crypto currency companies from the financial investment industry in New York.
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