SEC Fines Genesis and Gemini for Selling Unregistered Securities

Von | 14. Januar 2023

• The US Securities and Exchange Commission (SEC) has filed charges against Genesis and Gemini accusing the two of selling unregistered securities through the Gemini Earn product.
• The Gemini Earn product allowed Gemini and Genesis to earn billions of dollars from investors despite the product being unregistered.
• Genesis has been having liquidity issues after FTX’s collapse and has paused withdrawals to date.

The US Securities and Exchange Commission (SEC) has filed charges against Genesis and Gemini, alleging that the two companies have been selling unregistered securities through their Gemini Earn product. The SEC claims that the companies misrepresented their business model by advertising returns of up to 8% to investors without first registering the partnership as a lending partnership with the relevant authorities.

According to the SEC, the Gemini Earn product was launched in February 2021 and ran until January 8, 2022. During this period, customers of Gemini were able to earn yield by lending their crypto assets to Genesis, a subsidiary of Digital Currency Group (DCG). The SEC claims that by allowing investors to earn yield without having to register the partnership as a lending partnership, Genesis and Gemini have been able to gain billions of dollars from investors.

Unfortunately for Genesis, the company has since been hit by liquidity issues after the collapse of FTX and had to pause withdrawals. Open letters from Gemini co-founder Cameron Winklevoss have revealed that Genesis has been dealing with “unexpected liquidity constraints” and had to halt withdrawals in order to protect customer funds.

The SEC has now filed charges against the two companies, accusing them of selling unregistered securities. If found guilty, Genesis and Gemini could face significant fines and penalties for their alleged misconduct. The SEC has also warned investors to be aware of such schemes and to invest their money only in products that have been properly registered and approved by the relevant authorities.