Genesis Global Capital to Pay $21M Over Charges on Gemini Earn Lending Program
Summary:
Genesis Global Capital LLC will pay a $21 million penalty to settle charges related to its Gemini Earn lending program. The Securities and Exchange Commission initiated a lawsuit against Genesis and Gemini in January 2023, for selling unauthorized securities. This comes on the heels of a $37 million fine Gemini agreed to pay for compliance failures. Gemini plans to return at least $1.1 billion to customers through the Genesis bankruptcy proceedings, pending court approval.
In a finalized court settlement over its Gemini Earn lending initiative, Genesis Global Capital LLC has consented to pay a civil penalty worth $21 million. Genesis was implicated alongside Gemini for an unauthorized securities offering when they introduced the Gemini Earn crypto lending scheme for individual investors. Gary Gensler, the Securities and Exchange Commission (SEC) chairperson, stated in a March 19 declaration that this settlement reiterates the fact that crypto lending platforms must abide by long-established securities regulations to ensure investor safety and market trust. The SEC will only be able to collect part of the penalty after other bankruptcy obligations are met, which includes compensations claimed by Gemini Earn's retail investors. The lawsuit launched by the SEC against Genesis and Gemini in January 2023, for peddling unauthorized securities through their Gemini Earn program, will culminate with the $21 million penalty. Genesis interrupted user withdrawals in November 2022 when Gemini Earn had roughly 340,000 clients and managed assets worth $900 million. Three weeks ago, Gemini had agreed to settle a $37 million penalty for several compliance infringements that compromised the company's security, as stated by Adrienne A. Harris, the Superintendent of New York State Department of Financial Services (NYDFS), in a statement on Feb. 28. The $37 million fine forms a part of the settlement between Gemini and the NYDFS, which will result in Gemini reimbursing at least $1.1 billion to the clients of Gemini Earn Program via the Genesis bankruptcy proceedings. Upon the approval of the bankruptcy court, Gemini expects users to recover all their crypto assets along with appreciation, taking the estimate over $1.8 billion in total value restitution—$700 million more than when Genesis suspended withdrawals on November 16, 2022.
Published At
3/19/2024 4:34:32 PM
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