Hey Peeps!
On January 12th, the Securities and Exchange Commission announced, via a press release, they were filing charges against both Gemini and Genesis for "the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program."
Officially, Gemini and Genesis have been charged with "violations of Sections 5(a) and 5(c) of the Securities Act of 1933."
These violations stem from the Gemini Earn Lending Program that launched in February 2021.
This program is where Gemini loaned customers' crypto assets to Genesis in exchange for Genesis’ promise to pay interest to the Gemini Earn investors.
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors. Today’s charges build 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. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
- Gary Gensler, Chair of the SEC
Here is the tweet from the SEC also announcing the news:
"The recent collapse of crypto asset lending programs and the suspension of Genesis’ program underscore the critical need for platforms offering securities to retail investors to comply with the federal securities laws. As we’ve seen time and again, the failure to do so denies investors the basic information they need to make informed investment decisions. Our investigations in this space are very much active and ongoing and we encourage anyone with information about this matter or other possible securities law violations to come forward, including under our Whistleblower Program if applicable.”
- Gurbir S. Grewal, Director of the SEC’s Division of Enforcement
The SEC's complaint is seeking "permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties" against both Gemini and Genesis.
Co-Founder of Gemini, Tyler Winklevoss, responded to the news on Twitter and called it "disappointing" and "counterproductive".
He went on to state that the Gemini Earn program was regulated by NYDFS for 17 months without any issues raised, and now suddenly charges are being filed.
I am not sure where I stand on this, but it does seem odd for regulators to allow the Gemini Earn program to operate for almost 2 years, and then charge them after Gemini and Genesis are having issues.
Also, I will say that based on all the news I have seen that Gemini seems to be trying to resolve the issue, where Genesis is dragging their feet and not really concerned, despite the program tanking because of their liquidity crisis.
At the end of the day, all I care about is customers getting their money and assets back.
Is this part of the push to regulate crypto more strictly?
Do you welcome this or are you hesitant against changes?
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