• The SEC has charged crypto exchange Gemini and crypto lender Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), for the unregistered offer and sale of securities to retail investors.
• The SEC alleged that through this unregistered offering, Genesis and Gemini raised billions of dollars‘ worth of crypto assets from hundreds of thousands of investors.
• The two companies offered the Gemini Earn cryptocurrency lending program to retail investors between February 2021 and November 2022.
The United States Securities and Exchange Commission (SEC) has taken action against crypto exchange Gemini and crypto lender Genesis Global Capital, a subsidiary of Digital Currency Group (DCG). The SEC has accused the two companies of offering unregistered securities to retail investors through the Gemini Earn crypto asset lending program.
The SEC alleged that Genesis and Gemini have raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors through this unregistered offering. The two companies offered the Gemini Earn cryptocurrency lending program to retail investors between February 2021 and November 2022. According to the SEC, more than 50 crypto assets were eligible to be invested in the Gemini Earn program, including bitcoin, ether, USD Coin, and dogecoin.
The SEC further alleged that Gemini acted as the agent to facilitate the transaction between investors and Genesis. Investors would tender their crypto assets to Genesis, and Genesis would then exercise its discretion in how to use investors‘ crypto assets. The SEC noted that the investigation is ongoing.
In response to the SEC’s action, Tyler Winklevoss, the co-founder of Gemini, said that the regulator’s lawsuit was “super lame”. He further stated that Gemini has always “complied with all applicable laws” and that the SEC’s action will not impact its business. Winklevoss also noted that the SEC’s action is “very limited in scope” and that the company will continue to “operate business as usual.”