According to the official announcement made by the SEC, Genesis agreed to pay a $21 million penalty to the SEC.
Genesis Global Capital LLC will pay a $21 million penalty after pleading guilty to charges that it engaged in the unregistered offer and sale of securities through a cryptocurrency, the SEC said.
The SEC said the money would first be used to pay any other claims authorized by the bankruptcy court, including claims from retail investors in the Gemini Earn program, and then it would receive the remainder.
SEC Chairman Gary Gensler In the statement he said:
“We sued Genesis, accusing it of failing to register its retail crypto lending product before offering it public, bypassing basic disclosure requirements designed to protect investors.
Today’s agreement builds on previous actions to make clear to the market and investors that cryptocurrency lending platforms and other intermediaries must comply with our time-tested securities laws.
Doing this best protects investors. It increases confidence in the markets. It is not optional. “This is the law.”
In addition to the fine, the SEC also agreed to a final order permanently enjoining Genesis from violating Section 5 of the Securities Act.
What Happened?
In January 2023, the US Securities and Exchange Commission (SEC) accused and sued cryptocurrency firms Genesis and Gemini for allegedly selling unregistered securities in connection with a high-yield product offered to depositors.
According to the SEC, Genesis borrowed Gemini users’ crypto and sent a portion of the profits back to Gemini, which then deducted a brokerage fee of sometimes over 4% and returned the remaining profits to its users. SEC officials had said Genesis was required to register this product as a securities offering.
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