Genesis Global Agrees to Pay $21 Million to Settle SEC Charges from Gemini Earn Program

By Emon Reiser

Bankrupt crypto lender Genesis Global Capital has agreed to pay $21 million to settle charges from regulators that it failed to register its retail crypto lending product before offering it to the public, the Securities and Exchange Commission said Tuesday.

Under the terms of the settlement, the SEC will not receive any payments until after the Digital Currency Group subsidiary has settled other claims in bankruptcy court, including outstanding claims from Gemini Earn investors.

"Today's 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," SEC Chair Gary Gensler said.

The SEC in January alleged that Genesis and Gemini Trust Co. engaged in the unregistered offer and sale of securities through the Gemini Earn program.

The Gemini Earn program was marketed as an investment opportunity wherein Gemini customers, including retail investors in the U.S., could loan their crypto assets to Genesis in exchange for interest payments.

In November 2022, Genesis halted withdrawals from Gemini Earn because it lacked the assets to fulfill requests as volatility riled the crypto market. At the time, Genesis held about $900 million in crypto assets from 340,000 Gemini Earn investors.

Genesis on Monday was scheduled to begin closing arguments to wind down the business after a year of disputes as cryptocurrency values began to rise again.

Genesis's agreement with the SEC doesn't admit or deny wrongdoing.

Write to Emon Reiser at emon.reiser@wsj.com

(END) Dow Jones Newswires

March 19, 2024 10:27 ET (14:27 GMT)

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