CRIMINAL CRYPTO CAPITALI$M TOO
Genesis, Winklevoss twins’ Gemini crypto venture, charged by SEC with selling unregistered securitiesStory by Claudia Assis •
Genesis, Winklevoss twins’ Gemini crypto venture, charged by SEC with selling unregistered securities© AFP via Getty Images
U.S. securities regulators on Thursday charged Genesis Global Capital and crypto exchange Gemini Trust Co. with offering and selling of unregistered securities to retail investors, bypassing disclosures and other requirements aimed at protecting market participants.
Related video: Genesis Reportedly Owes Creditors Over $3B; Blockchain.com Lays Off 28% of Workforce (CoinDesk) View on Watch
BloombergSEC Sues Crypto Brokerages Gemini and Genesis
4:52
CoinDesk SEC Charges Gemini, Genesis For Allegedly Selling Unregistered Securities
9:53
CoinDesk Gemini's Cameron Winklevoss Says Barry Silbert Is 'Unfit to Run DCG'
3:48
Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors through unregistered offers, using a crypto asset-lending program called Gemini Earn, the Securities and Exchange Commission said.
The complaint seeks the return of any “ill-gotten gains” plus interest, and any civil penalties, the SEC said.
The SEC is also investigating whether other securities-law violations were committed and whether there are other companies or people relating to the alleged misconduct.
Twins Tyler and Cameron Winklevoss are the founders of Gemini. The crypto exchange was sued late last year by investors alleging that the company sold interest-bearing accounts without registering them as securities, also through the Gemini Earn program.
Also see: ‘Super lame,’ says Gemini co-founder Tyler Winklevoss about SEC charges
The Winklevoss twins were early champions of cryptocurrencies, using the money and fame they won in legal wrangling with Facebook parent Meta Platforms Inc. and Meta’s founder Mark Zuckerberg over their role in creating the social-media giant to launch Gemini.
According to the SEC complaint, the Gemini Earn agreement between Genesis, part of a subsidiary of Digital Currency Group, and Gemini started in December 2020.
Gemini customers, including U.S. retail investors, were to have an opportunity to loan their crypto assets to Genesis in exchange for Genesis’ promise to pay a high interest rate.
Gemini deducted agent fees that were as high as 4.29%, the SEC alleges.
“Genesis then exercised its discretion in how to use investors’ crypto assets to generate revenue and pay interest to Gemini Earn investors,” the SEC said.
By November, however, Genesis announced it would not allow the Gemini Earn investors to withdraw their crypto assets because of a liquidity crunch following volatility in the crypto market after FTX’s bankruptcy filing, the SEC said.
Also read: Gemini’s Cameron Winklevoss accuses crypto exec Barry Silbert of ‘bad faith’ stalling over frozen funds
At the time, Genesis held about $900 million in investor assets from 340,000 Gemini Earn investors, the SEC said. Gemini ended the Gemini Earn program earlier this month.
“As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets,” the SEC said in a statement.
“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” SEC Chair Gary Gensler said in a statement.
The charges “build on previous actions to make clear to the marketplace and the investing public that crypto-lending platforms and other intermediaries need to comply with our time-tested securities laws,” Gensler said.
The SEC’s complaint was filed in the U.S. District Court for the Southern District of New York
Genesis, Winklevoss twins’ Gemini crypto venture, charged by SEC with selling unregistered securities© AFP via Getty Images
U.S. securities regulators on Thursday charged Genesis Global Capital and crypto exchange Gemini Trust Co. with offering and selling of unregistered securities to retail investors, bypassing disclosures and other requirements aimed at protecting market participants.
Related video: Genesis Reportedly Owes Creditors Over $3B; Blockchain.com Lays Off 28% of Workforce (CoinDesk) View on Watch
BloombergSEC Sues Crypto Brokerages Gemini and Genesis
4:52
CoinDesk SEC Charges Gemini, Genesis For Allegedly Selling Unregistered Securities
9:53
CoinDesk Gemini's Cameron Winklevoss Says Barry Silbert Is 'Unfit to Run DCG'
3:48
Genesis and Gemini raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors through unregistered offers, using a crypto asset-lending program called Gemini Earn, the Securities and Exchange Commission said.
The complaint seeks the return of any “ill-gotten gains” plus interest, and any civil penalties, the SEC said.
The SEC is also investigating whether other securities-law violations were committed and whether there are other companies or people relating to the alleged misconduct.
Twins Tyler and Cameron Winklevoss are the founders of Gemini. The crypto exchange was sued late last year by investors alleging that the company sold interest-bearing accounts without registering them as securities, also through the Gemini Earn program.
Also see: ‘Super lame,’ says Gemini co-founder Tyler Winklevoss about SEC charges
The Winklevoss twins were early champions of cryptocurrencies, using the money and fame they won in legal wrangling with Facebook parent Meta Platforms Inc. and Meta’s founder Mark Zuckerberg over their role in creating the social-media giant to launch Gemini.
According to the SEC complaint, the Gemini Earn agreement between Genesis, part of a subsidiary of Digital Currency Group, and Gemini started in December 2020.
Gemini customers, including U.S. retail investors, were to have an opportunity to loan their crypto assets to Genesis in exchange for Genesis’ promise to pay a high interest rate.
Gemini deducted agent fees that were as high as 4.29%, the SEC alleges.
“Genesis then exercised its discretion in how to use investors’ crypto assets to generate revenue and pay interest to Gemini Earn investors,” the SEC said.
By November, however, Genesis announced it would not allow the Gemini Earn investors to withdraw their crypto assets because of a liquidity crunch following volatility in the crypto market after FTX’s bankruptcy filing, the SEC said.
Also read: Gemini’s Cameron Winklevoss accuses crypto exec Barry Silbert of ‘bad faith’ stalling over frozen funds
At the time, Genesis held about $900 million in investor assets from 340,000 Gemini Earn investors, the SEC said. Gemini ended the Gemini Earn program earlier this month.
“As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets,” the SEC said in a statement.
“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” SEC Chair Gary Gensler said in a statement.
The charges “build on previous actions to make clear to the marketplace and the investing public that crypto-lending platforms and other intermediaries need to comply with our time-tested securities laws,” Gensler said.
The SEC’s complaint was filed in the U.S. District Court for the Southern District of New York
SEC charges Genesis, Gemini with selling unregistered securities
Jennifer Schonberger
·Senior Reporter
Thu, January 12, 2023 at 3:00 PM MST·3 min read
The Securities and Exchange Commission on Thursday charged Genesis Global Capital and Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, for selling unregistered securities to investors through Gemini's Earn crypto asset lending program.
The SEC alleges the Gemini Earn program constituted an offer and sale of securities under SEC law, raising billions of dollars of crypto assets from hundreds of thousands of investors, and should have registered with the SEC.
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," SEC Chair Gary Gensler said in a statement.
"Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law."
According to the complaint, in December 2020, Genesis entered into an agreement with Gemini to offer Gemini customers the ability to loan their crypto assets to Genesis in exchange for interest payments.
Beginning in February 2021, Genesis and Gemini began offering the program to investors.
Gemini facilitated the transaction and deducted for itself an agent fee, sometimes as high as 4.29%, from the returns it received from Genesis, according to the SEC.
The SEC alleges Genesis then exercised its discretion in how to use investors' crypto assets to generate revenue and pay interest to investors.
Last November, Genesis, which is a wholly-owned subsidiary of Barry Silbert's Digital Currency Group (DCG), announced it would pause withdrawals on its lending platform as it lacked sufficient liquidity to meet requests amid volatility in the crypto market in the wake of FTX's collapse. At the time Genesis held approximately $900 million Gemini customer deposits, which remain frozen on the platform.
The SEC's announcement comes as Genesis and Gemini have been engaged in a war of words, with Cameron Winklevoss earlier this week calling for DCG CEO Barry Silbert to step down and accusing Silbert and others at DCG of making "false statements and misrepresentations to Gemini."
Cameron Winklevoss, co-founder of crypto exchange Gemini Trust Co., attends the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021. (Photo by Marco BELLO / AFP)
Jennifer Schonberger
·Senior Reporter
Thu, January 12, 2023 at 3:00 PM MST·3 min read
The Securities and Exchange Commission on Thursday charged Genesis Global Capital and Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, for selling unregistered securities to investors through Gemini's Earn crypto asset lending program.
The SEC alleges the Gemini Earn program constituted an offer and sale of securities under SEC law, raising billions of dollars of crypto assets from hundreds of thousands of investors, and should have registered with the SEC.
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," SEC Chair Gary Gensler said in a statement.
"Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law."
According to the complaint, in December 2020, Genesis entered into an agreement with Gemini to offer Gemini customers the ability to loan their crypto assets to Genesis in exchange for interest payments.
Beginning in February 2021, Genesis and Gemini began offering the program to investors.
Gemini facilitated the transaction and deducted for itself an agent fee, sometimes as high as 4.29%, from the returns it received from Genesis, according to the SEC.
The SEC alleges Genesis then exercised its discretion in how to use investors' crypto assets to generate revenue and pay interest to investors.
Last November, Genesis, which is a wholly-owned subsidiary of Barry Silbert's Digital Currency Group (DCG), announced it would pause withdrawals on its lending platform as it lacked sufficient liquidity to meet requests amid volatility in the crypto market in the wake of FTX's collapse. At the time Genesis held approximately $900 million Gemini customer deposits, which remain frozen on the platform.
The SEC's announcement comes as Genesis and Gemini have been engaged in a war of words, with Cameron Winklevoss earlier this week calling for DCG CEO Barry Silbert to step down and accusing Silbert and others at DCG of making "false statements and misrepresentations to Gemini."
Cameron Winklevoss, co-founder of crypto exchange Gemini Trust Co., attends the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021. (Photo by Marco BELLO / AFP)
Investigations continue
“The recent collapse of crypto asset lending programs and the suspension of Genesis’ program underscore the critical need for platforms offering securities to retail investors to comply with the federal securities laws,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement. “As we’ve seen time and again, the failure to do so denies investors the basic information they need to make informed investment decisions.
Investigations into other securities law violations and other entities and persons relating to alleged misconduct are ongoing, according to the SEC.
Grewal encouraged anyone with information about this case or others to come forward and, if necessary, do so under the SEC’s Whistleblower Program.
The SEC is filing a litigated action and part of the requested relief from the Federal District Court will be a monetary civil penalty, plus disgorgement of any ill gotten gains.
The SEC’s action comes after investors brought a class action lawsuit against Gemini, alleging they were duped into investing in the exchange's interest-bearing accounts without being informed that they were unregistered securities.
Gensler has warned for months the agency would take enforcement action if firms didn't comply with SEC rules.
Gensler told Yahoo Finance in an interview in December he has one goal when it comes to regulating crypto markets in 2023: Make crypto exchanges and lending platforms come into compliance with existing rules.
"They can do that appropriately, working with the SEC, or we can continue on a course with more enforcement actions, and I would have to say that the runway's getting shorter," Gensler said.
U.S. securities regulator charges Genesis, Gemini with unregistered offerings
People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C.
Thu, January 12, 2023
By Hannah Lang and Chris Prentice
WASHINGTON/NEW YORK (Reuters) -The U.S. Securities and Exchange Commission (SEC) on Thursday said it has charged Genesis Global Capital LLC and Gemini Trust Company LLC with illegally selling securities to hundreds of thousands of investors through their crypto lending program.
Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, the SEC said. Beginning in February 2021, they raised billions of dollars' worth of crypto assets from investors, the SEC said.
The firms violated securities laws through the offer and sale of crypto assets through their Gemini Earn product, the SEC said.
In a Twitter post, Gemini co-founder and Chief Executive Officer Tyler Winklevoss called the complaint disappointing and said the company looks forward to defending itself.
"This action does nothing to further our efforts and help Earn users get their assets back. Their behavior is totally counterproductive," he said.
Genesis did not immediately respond to a request for comment.
In November 2022, Genesis told investors they could not withdraw their crypto assets as volatility in the crypto markets prompted a liquidity crunch. At the time, Genesis had about $900 million in assets from 340,000 Gemini Earn investors. The investors have been unable to withdraw their assets, the regulator said.
Investigations into other, related violations are ongoing, the agency said.
In February 2022, a subsidiary of rival crypto firm BlockFi Inc. agreed to pay $100 million to the SEC and 32 states to settle charges related to their offering of a similar interest-bearing product.
Gemini and other Genesis creditors have been agitating for a solution to avoid a situation similar to FTX's rapid descent into bankruptcy. Genesis owes creditors more than $3 billion, according to a person familiar with the matter.
Gemini co-founder Cameron Winklevoss publicly called for the ouster of DCG Chief Executive Barry Silbert on Tuesday, accusing Silbert of defrauding creditors and engaging in "bad faith stall tactics." DCG has called Winklevoss' allegations false and defamatory.
(Reporting by Chris Prentice and Hannah Lang; Editing by Daniel Wallis)
“The recent collapse of crypto asset lending programs and the suspension of Genesis’ program underscore the critical need for platforms offering securities to retail investors to comply with the federal securities laws,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement. “As we’ve seen time and again, the failure to do so denies investors the basic information they need to make informed investment decisions.
Investigations into other securities law violations and other entities and persons relating to alleged misconduct are ongoing, according to the SEC.
Grewal encouraged anyone with information about this case or others to come forward and, if necessary, do so under the SEC’s Whistleblower Program.
The SEC is filing a litigated action and part of the requested relief from the Federal District Court will be a monetary civil penalty, plus disgorgement of any ill gotten gains.
The SEC’s action comes after investors brought a class action lawsuit against Gemini, alleging they were duped into investing in the exchange's interest-bearing accounts without being informed that they were unregistered securities.
Gensler has warned for months the agency would take enforcement action if firms didn't comply with SEC rules.
Gensler told Yahoo Finance in an interview in December he has one goal when it comes to regulating crypto markets in 2023: Make crypto exchanges and lending platforms come into compliance with existing rules.
"They can do that appropriately, working with the SEC, or we can continue on a course with more enforcement actions, and I would have to say that the runway's getting shorter," Gensler said.
U.S. securities regulator charges Genesis, Gemini with unregistered offerings
People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C.
Thu, January 12, 2023
By Hannah Lang and Chris Prentice
WASHINGTON/NEW YORK (Reuters) -The U.S. Securities and Exchange Commission (SEC) on Thursday said it has charged Genesis Global Capital LLC and Gemini Trust Company LLC with illegally selling securities to hundreds of thousands of investors through their crypto lending program.
Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, the SEC said. Beginning in February 2021, they raised billions of dollars' worth of crypto assets from investors, the SEC said.
The firms violated securities laws through the offer and sale of crypto assets through their Gemini Earn product, the SEC said.
In a Twitter post, Gemini co-founder and Chief Executive Officer Tyler Winklevoss called the complaint disappointing and said the company looks forward to defending itself.
"This action does nothing to further our efforts and help Earn users get their assets back. Their behavior is totally counterproductive," he said.
Genesis did not immediately respond to a request for comment.
In November 2022, Genesis told investors they could not withdraw their crypto assets as volatility in the crypto markets prompted a liquidity crunch. At the time, Genesis had about $900 million in assets from 340,000 Gemini Earn investors. The investors have been unable to withdraw their assets, the regulator said.
Investigations into other, related violations are ongoing, the agency said.
In February 2022, a subsidiary of rival crypto firm BlockFi Inc. agreed to pay $100 million to the SEC and 32 states to settle charges related to their offering of a similar interest-bearing product.
Gemini and other Genesis creditors have been agitating for a solution to avoid a situation similar to FTX's rapid descent into bankruptcy. Genesis owes creditors more than $3 billion, according to a person familiar with the matter.
Gemini co-founder Cameron Winklevoss publicly called for the ouster of DCG Chief Executive Barry Silbert on Tuesday, accusing Silbert of defrauding creditors and engaging in "bad faith stall tactics." DCG has called Winklevoss' allegations false and defamatory.
(Reporting by Chris Prentice and Hannah Lang; Editing by Daniel Wallis)
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