SEC accuses Gemini and Genesis of unregistered sale of securities

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The US Securities and Exchange Commission has charged the Gemini exchange and the Genesis lending service with unregistered sales of securities. This is connected with the Gemini Earn program.

The program was launched at the end of 2020, and inIn February 2021, retail clients of the exchange gained access to it. With Gemini Earn, users could make cryptocurrency deposits into the Genesis service through the Gemini platform and earn income on their funds.

Last November, after the stock market collapseFTX, the Genesis service is experiencing problems. Company representatives said that Gemini Earn users will not be able to get their money back - Genesis simply does not have enough liquid funds. After this, complaints began to American law enforcement agencies, and at the beginning of 2023, Gemini terminated the agreement with the credit service.

An SEC spokesman said Genesis and Geminientered into a partnership agreement for the offer and sale of securities without the permission of the regulator. The issuer of the securities, according to the Commission, was Genesis, but both companies were liable.

"Today's charges are based on pastactions of companies. The charges should send a message to the market and investors that cryptocurrency lending services and intermediaries must comply with time-tested securities laws. They protect investors and promote confidence in markets. You have no choice whether to comply with them or not, it’s the law!” said an SEC representative.

Co-founder of the Gemini exchange Tyler Winklevoss(Tyler Winklevoss) said he was disappointed with the SEC's decision to bring charges against the exchange. He stressed that these charges will not help investors recover their funds. Additionally, the Gemini Earn program was regulated by the State of New York.

At the end of December last year, the Gemini exchangeunveiled a possible plan to return funds to Earn users, and this month the exchange announced it was terminating its agreement with Genesis Global Capital and shutting down the program.