Genesis Global Agrees to $21M Civil Penalty Linked to Gemini Earn

Genesis Global, a bankrupt crypto lender, has agreed to a $21 million civil penalty related to the now-defunct Gemini Earn lending initiative, as per a March 19 statement from the US SEC.

The settlement terms stipulate that the SEC will only receive the penalty after Genesis settles all bankruptcy claims, including those from Gemini Earn investors.

This resolution, originally reached in January, represents a significant moment for Genesis, enabling it to refocus on its ongoing bankruptcy proceedings.

Securities Law Breaches

SEC Chairman Gary Gensler highlighted that the failed investment program circumvented crucial disclosure requirements intended to safeguard retail investors. He emphasized the importance of crypto lending platforms and other intermediaries complying with established securities laws to protect investors and foster market trust.

Gurbir S. Grewal, Director of the SEC's Division of Enforcement, noted that Gemini Earn's collapse underscores the risks investors face when market participants disregard federal securities laws.

The settlement comes shortly after a US Court upheld the SEC's argument that Genesis and Gemini crypto exchange offered and sold securities through the Earn product, as per the Howey and Reves tests. This fine signifies the conclusion of the SEC's lawsuit against the company.

Gemini Earn Update

In a related development, the Winklevoss twins-led crypto exchange Gemini assured its Earn users that they would receive "100% of their digital assets back in kind" following an agreement with bankrupt Genesis and other creditors.

Gemini also disclosed a settlement agreement with the New York State Department of Financial Services (NYDFS), committing to returning a minimum of $1.1 billion to customers enrolled in its Earn Program. Additionally, the exchange will pay a $37 million penalty for previous non-compliance with local regulations.