Genesis Global Settles SEC Lawsuit Tied to Gemini Crypto Lending Programbr>
Crypto lender Genesis Global has reached a settlement with the U.S. Securities and Exchange Commission (SEC) regarding unlawful securities sales through its partnership with Gemini Trust on the Gemini Earn lending program.
The settlement, filed in the U.S. Bankruptcy Court in Manhattan, involves a $21 million fine that Genesis would only have to pay if it succeeds in reimbursing customers through its bankruptcy proceedings.
The agreement allows Genesis to avoid legal fees and uncertainty from defending itself in the SEC’s lawsuit. More importantly, it permits the bankrupt company to focus its resources on repaying users and other creditors rather than litigation. However, Genesis did not admit or deny any wrongdoing related to the SEC’s allegations that it collaborated with Gemini to sell hundreds of thousands of investors unregistered securities through the interest-earning crypto lending service.
Genesis launched the liquidation process to reimburse customers in cash or their deposited crypto assets based on individual accounts. It aims to seek court approval for its bankruptcy repayment plan on February 14th. The companies also face action from the New York Attorney General over potentially unlawful financial activities in the state.
The SEC sued Genesis just before it filed for Chapter 11 bankruptcy protection in January 2023, alleging the Gemini Earn program violated securities laws.