SEC Charges Gemini and Genesis for Unregistered Crypto Offerings

• The U.S. Securities and Exchange Commission (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 through the Gemini Earn Crypto asset lending program.
• The SEC alleged that between February 2021 and November 2022, Genesis and Gemini raised billions of dollars‘ worth of crypto assets from hundreds of thousands of investors.
• Gemini and Genesis allegedly offered the Gemini Earn cryptocurrency lending program to retail investors, with more than 50 crypto assets eligible to be invested in the program.

The U.S. Securities and Exchange Commission (SEC) announced Thursday that it has charged crypto exchange Gemini and crypto lender Genesis Global Capital with the unregistered offer and sale of securities to retail investors through the Gemini Earn Crypto asset lending program.

The SEC alleged that between February 2021 and November 2022, Genesis and Gemini raised billions of dollars‘ worth of crypto assets from hundreds of thousands of investors. According to the regulator, the two companies offered the Gemini Earn cryptocurrency lending program to retail investors, with more than 50 crypto assets eligible to be invested in the program, including bitcoin, ether, USD Coin, and dogecoin.

Under the agreement, Genesis entered into with Gemini, the latter would act as an agent to facilitate the transaction between investors and Genesis. Investors would tender their crypto assets, and Genesis would have the discretion to use those assets as it sees fit.

In a statement, the SEC noted that it is still investigating the case and that the charges against the two companies should serve as a warning to other companies who may be engaging in similar activities. The regulator said it will continue to take action against those who are offering and selling securities without registering with the SEC or qualifying for an exemption.

The SEC’s enforcement action against Genesis and Gemini has been met with criticism from the crypto community, including Tyler Winklevoss, the co-founder of Gemini, who described the regulator’s lawsuit as “super lame”.