Bankrupt cryptocurrency lender Genesis has agreed to pay $21 million to settle charges against it by the US Securities and Exchange Commission (SEC).
The recent deal announced on Mar. 19 is centered on Jan. 2023 charges the securities watchdog filed against Genesis and Gemini over their lending program. However, part of the settlement terms is that the SEC would only receive part of the fine after the bankruptcy court settles other claims relating to the case.
Gemini Settles With The SEC
The $21 million settlement is part of a conclusive court ruling to resolve Gemini Earn lending program charges. The charges stemmed from allegations that the firm conducted an unregistered securities offering after it launched the Gemini Earn crypto lending initiative for retail investors.
In response to the settlement, Gary Gensler, the SEC Chair, stressed the need for crypto lending platforms and intermediaries to adhere to established securities regulations, asserting that compliance safeguards investors and enhances market confidence.
According to him, compliance is not optional but obligatory as it constitutes a fundamental aspect of the legal framework.
Ending The Long-Awaited Legal Battle
This $21 million settlement ended a long-awaited legal brawl. Recall that Genesis suspended user withdrawals on its platform in Nov. 2022. At that time, Gemini Earn boasted approximately 340,000 customers and managed assets worth $900 million.
This fine announcement follows Gemini’s agreement on Feb. 28 to settle with a $37 million penalty over various compliance deficiencies. Superintendent Adrienne Harris of the New York State Department of Financial Services (NYDFS) described these deficiencies as threatening the company’s stability and integrity.
Notably, the $37 million penalty is part of the broader settlement between Gemini and the NYDFS. This entails reimbursing at least $1.1 billion to customers of the Gemini Earn program through the ongoing Genesis bankruptcy proceedings. Once the bankruptcy court approves it, Gemini expects that Earn users will get back all their crypto assets plus any accrued interest.
