The crypto firm went bankrupt after the FTX collapse
Genesis Global Capital, a bankrupt crypto lender, has agreed to pay $21 million to settle charges with the U.S. Securities and Exchange Commission (SEC) for violating securities laws that are related to its involvement with the now-defunct Gemini Earn program.
Genesis, which is undergoing bankruptcy proceedings, and the twin brothers Cameron and Tyler Winklevoss’s cryptocurrency exchange, Gemini, ran a lending program called Gemini Earn that allowed investors to earn interest on their digital assets. The SEC had objections to this earned product, saying that this is an unregistered security.
The tussle between Genesis and Gemini began when the crypto exchange FTX collapsed in November 2022. Genesis Global Capital had around $175 million in funds locked up with FTX. After hearing the news of FTX’s collapse, Genesis paused withdrawals from the Gemini Earn program, which had approximately $900 million in assets from 340,000 users.
Crypto exchange and Genesis creditor Gemini didn’t like the way Genesis dealt with the financial troubles. Cameron Winklevoss wrote an open letter in January 2023 addressed to the CEO of Digital Currency Group, the parent organization of Genesis. In the letter, he accused the parent firm of acting in “bad faith” by delaying the process of returning the $900 million owed to clients of Gemini’s Earn program.
After almost one and a half years of crypto meltdown and court proceedings, Genesis has agreed to pay $21 million to settle charges with the SEC. The SEC will not receive any “portion of the penalty until after payment of all other allowed claims by the bankruptcy court,” according to the press release.
The settlement comes days after a New York judge said that the SEC could sue Genesis and Gemini over the Gemini Earn program. Last month, the Winklevoss twins promised to return $1.1 billion to their Earn customers once Genesis concludes its bankruptcy proceedings. It’s part of a Gemini settlement with the New York State Department of Financial Services.
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