It looks like the US Securities and Exchange Commission (SEC) has set its sights on a cryptocurrency exchange. According to the latest developments, Gemini, one of the famous Bitcoin exchanges, has been accused by the SEC of selling unregistered securities through the “Earn” program. Here are the details…
SEC crackdown on Bitcoin and altcoin exchange Gemini
On January 12, the United States Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency lending firm Genesis Global Capital and crypto exchange Gemini’s program. He suggested that Gemini offers unregistered securities through its “Earn” program. In December 2020, Genesis, a subsidiary of crypto conglomerate Digital Currency Group (DCG), signed an agreement with Gemini to offer the exchange’s clients a yield-yielding crypto product. The service was later launched in February 2021.
Under the agreement, Gemini customers would be able to lend their cryptos to Genesis with a commitment that Genesis would repay the loan with interest. In addition, Genesis had full control over how it would generate returns to repay Gemini creditors. The SEC said in a statement that the Gemini Earn program handles the offering and selling of securities. For this reason, he claimed that he should be registered with the commission. SEC Chairman Gary Gensler used the following statements in a statement:
We argue that Genesis and Gemini offer unregistered securities to the public, bypassing disclosure requirements designed to protect investors.
Gensler stated that the allegations are “based on previous actions to explain to the market and the investing public that crypto lending platforms and other intermediaries must comply with time-tested securities laws.”
Reply from Winklevoss
On the other hand, Gemini co-founder Tyler Winklevoss responded to this move by the SEC. In a series of tweets on January 12, Tyler Winklevoss shared his frustration with the US Securities and Exchange Commission’s (SEC) accusations about Gemini’s “Earn” program, claiming that the regulator was “optimizing for political points.” He described the SEC’s action as “totally counterproductive,” and said Gemini had discussed the Earn program with the regulator for “over 17 months.”
“Until Genesis paused withdrawals on November 16, they never raised the possibility of any enforcement action,” Winklevoss added. cryptocoin.com As we reported, Gemini’s Earn product was launched in February 2021 and was officially active until January 8th. A deal with Genesis, a crypto lender and subsidiary of the Digital Currency Group (DCG), allows Gemini users to earn profits by lending their crypto to the market maker.
Earlier in November, Genesis announced that roughly $175 million was stuck on the now-bankrupt FTX exchange. DCG sent $140 million to the firm to bolster its balance sheet, but Genesis suspended withdrawals on November 16, citing FTX’s bankruptcy. According to open letters from Gemini co-founder Cameron Winklevoss, Genesis owes $900 million to its 340,000 Gemini Earn users. Finally, Tyler Winklevoss stated that Gemini will defend itself against charges of unregistered securities. He added that “this will not distract them from the important recovery work.”
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