Genesis Global Settles SEC Lawsuit for $21M and Surrenders BitLicense Amid Legal Fallout
Summary:
Bankrupt Genesis Global Holdco and its affiliates have settled a civil lawsuit with the US Securities and Exchange Commission (SEC) for $21 million over the unregistered sale of securities via the Gemini Earn program. The settlement ends a wave of legal actions initiated in 2021 between Gemini, Genesis, and parent company Digital Currency Group. Additionally, Genesis Global Trading, a separate entity, agreed to pay a fine and surrender its BitLicense after significant failings in its Anti-Money Laundering and cybersecurity measures were revealed by the New York Department of Financial Services.
Genesis Global Holdco, a company on the brink of bankruptcy, along with its associated entities, announced a $21 million settlement with the US Securities and Exchange Commission (SEC) on Jan 31. The agreement was presented in a document submitted to the US Bankruptcy Court for the Southern District of New York by Genesis' debtors, with a court hearing proposed for Feb. 14 to formalize the settlement. The agreement would see the SEC receive $21 million to close a civil lawsuit against Genesis for running the Gemini Earn program, which offered and sold securities without registration.
The agreement was crafted after thorough discussions between the SEC and Genesis Global (GGC) and will resolve the civil action claim initiated by the SEC in the context of these Chapter 11 cases. The settlement will help circumvent issues such as the uncertainties, costs, and risks linked with lengthy litigation against the SEC, benefiting the Genesis debtors considerably.
Kroll revealed that the settlement result stems from a lawsuit brought by the SEC against Genesis and Gemini in January 2023. The SEC's lawsuit honed in on the firms' actions between February 2021 and November 2022, claiming violations of US securities laws via a cryptocurrency lending scheme. Genesis hit the pause button on withdrawals on its platform in November 2022, and filed for bankruptcy in January 2023. This precipitated numerous legal battles involving Gemini, Genesis, and Genesis's parent company, Digital Currency Group, helmed by CEO Barry Silbert.
The announcement of this settlement is just one of many involving the SEC, which has been embroiled in ongoing lawsuits with various US-based cryptocurrency firms including Ripple, Binance, Coinbase, and Kraken. The SEC disclosed a settlement of $24 million in August 2023 for its case against Bittrex and its former CEO William Shihara, who were accused of running an unlicensed exchange.
Separately, Genesis Global Trading — another entity distinct from Genesis Global Capital and not linked with the Gemini Earn program — agreed to pay an $8-million fine to the New York Department of Financial Services on Jan. 12. This was instigated by an investigation that unearthed significant shortcomings in the firm's Anti-Money Laundering and cybersecurity measures. In response, the company agreed to wind up operations in New York and voluntarily revoke its BitLicense.
Lawmakers' apprehension and uncertainty drive proposed cryptocurrency regulations in the US, highlighted a recent magazine article.
Published At
2/2/2024 12:50:00 AM
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