SEC Raises ‘Completely Counterproductive’ Charges Against Gemini and Genesis

SEC accuses Gemini and Genesis of offering unregistered securities to retail investors.

Four days ago, the Securities and Exchange Commission (SEC) filed a lawsuit against the crypto lending firm Genesis and the crypto exchange Gemini for the offer and sale of unregistered securities through Gemini’s Earn program.

– We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements intended to protect investors. Today’s charges are based on previous actions to make it clear to the market and the investing public that crypto lending platforms and other intermediaries must comply with our time-tested securities laws – stated SEC Chairman Gary Gensler.

Genesis is a subsidiary of Digital Currency Group (DCG). Genesis and Gemini launched the Earn program in December 2020 to provide Gemini users with the opportunity to lend their crypto assets to Genesis and earn interest on them. However, Genesis froze its redemption services shortly after the collapse of FTX. The company currently owes $900 million to Gemini clients. Gemini co-founder Cameron Winklevoss and DCG CEO Barry Silbert have been involved in an escalating public dispute over the matter, with Winklevoss even calling for the DCG board to remove Silbert from his position as CEO in an open letter.

Gemini co-founder Tyler Winklevoss responded to the SEC filing on Twitter, stating that the regulator’s behavior is ‘completely counterproductive’ and that it is ‘optimized for political points instead of helping Gemini in its goal to serve 340,000 Earn program users and other creditors.’

Congressman Tom Emmer also criticized the SEC’s approach.

– Gary Gensler is once again late to the game, not protecting anyone. It is clear that his political strategy of regulation through enforcement is harming everyday Americans – Emmer wrote on Twitter.