SEC files a lawsuit against Gemini and Genesis due to alleged sales of non -registered securities
SEC files a lawsuit against Gemini and Genesis due to alleged sales of non -registered securities
The Securities and Exchange Commission (SEC) submitted a complaint against Genesis Global Capital and Gemini Trust Company because they supposedly did not sell registered securities to private investors in the USA. The SEC strives for permanent injunctive relief, the skimming of illegally obtained profits as well as front-end interest and civil law punishment.
Both companies collect billions of dollars by offering and selling securities via the crypto assets program Gemini Earn to US investors.
twins and genesis: a short story
Gemini, a US cryptocurrency exchange, and Genesis, a subsidiary of the Digital Currency Group, have come together in December 2020 to offer cryptocurrency loan services. The SEC says that Gemini has levied a fee for his services, which sometimes amounted to 4.29 % of the returns paid by Genesis.
In November 2022, Genesis hired the payment of interest to Gemini and the withdrawals and claimed that due to the volatility of the crypto-asset market, there was no sufficient liquids to meet withdrawal applications. At this point, however, Genesis held about more than $ 900 million in assets of more than 340,000 Gemini investors who were forced to terminate the Gemini Earn program in early January without receiving a refund.
As a result, the chairman of the SEC, Gary Gensler, claimed that "Genesis and Gemini offered the public that did not offer registered securities and bypassed the disclosure obligations to protect investors". Gensler said the complaint aims to show that crypto loan platforms and brokers have to comply with the US value paper laws.The director of the Department for Enforcing the SEC, Gurbir S. Grewal, said that the recent collapse and suspension of the Genesis program underline the need that these platforms comply with the federal securities laws. He also called on all those affected in the Genesis program or information about contacting the Whistleblower program of the SEC.
The SEC pushes more power over crypto companies
The complaint of the SEC states that Genesis and Gemini have offered securities via the Gemini Earn program without registering what violates Federal Working Act. In addition, the complaint states that companies have failed to pass on important information about the program to investors, including the risks of the rental of their crypto assets and the fact that the companies could use the assets at will without disclosing investors.
In addition, the complaint also claims that Genesis and Gemini have incorrectly stated that the program was fully secured, although this was actually not the case. The SEC also claims that the companies have given incorrect information about the value of the assets in the program.
The complaint of the SEC calls for a permanent relief order, the publication of illegally acquired profits as well as interest at the beginning and civil law punishment. The SEC also tries to prevent Genesis and Gemini from committing future securities injuries - which could not be too far for Genesis if the rumors are correct that it is considering bankruptcy.
The SEC said this case was a memory that all crypto credit platforms and brokers must comply with the US investors to protect investors and to ensure a fair and transparent market. As SEC chairman Gensler explained: "It is not optional. It is the law."
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