Bankrupt Genesis agrees to $21 million SEC fine over defunct Gemini Earn crypto lending violations
Bankrupt crypto lender Genesis Global has consented to a $21 million civil penalty tied to the now-defunct Gemini Earn lending initiative, according to a March 19 statement from the US SEC.
Under the settlement terms, the SEC will not be paid the penalty until Genesis satisfies all bankruptcy claims, including those from Gemini Earn investors.
This resolution, initially agreed upon in January, marks a pivotal moment for Genesis, allowing it to pivot its focus toward its ongoing bankruptcy proceedings.
Securities law violations
Gary Gensler, the SEC Chairman, said the failed investment program bypassed essential disclosure requirements designed to protect retail investors.
He added:
Todays settlement builds 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. Doing so best protects investors. It promotes trust in markets. Its not optional. Its the law.
Gurbir S. Grewal, the Director of SECs Division of Enforcement, furthered that Gemini Earns collapse highlights the unknown risks that investors are exposed to when market participants fail to comply with the federal securities laws.
Notably, the settlement is coming a few days after a US Court upheld the SECs argument that the lender and Gemini crypto exchange offered and sold securities via the Earn product under the Howey and Reves test.
Thus, this fine signifies the conclusion of the SECs lawsuit against the company.
Gemini Earn update
Last month, the Winklevoss twins-led crypto exchange Gemini assured its Earn users that they would receive 100% of their digital assets back in kind following an in-principle agreement with bankrupt Genesis and other creditors of the failed lender.
In addition, the exchange also disclosed a settlement agreement with the New York State Department of Financial Services (NYDFS). As per the terms, Gemini commits to returning a minimum of $1.1 billion to customers enrolled in its Earn Program.
Moreover, the exchange will pay a penalty of $37 million due to its previous non-compliance with local regulations.
The post Bankrupt Genesis agrees to $21 million SEC fine over defunct Gemini Earn crypto lending violations appeared first on CryptoSlate.
Text source: CryptoSlate
