• The US SEC has filed charges against Gemini and Genesis accusing them of selling unregistered securities via the Gemini Earn product.
• The partnership between Gemini and Genesis allowed Gemini customers to earn yield by lending their crypto assets to Genesis.
• Genesis found itself in turmoil after the FTX’s collapse and even paused withdrawals due to liquidity issues.
The United States Securities and Exchange Commission (SEC) has filed charges against Gemini and Genesis, accusing the two of selling unregistered securities through the Gemini Earn product. The SEC claims that Gemini and Genesis misrepresented their business model by advertising returns of up to 8% to their customers without properly registering the partnership as a lending partnership with the relevant authorities.
Gemini introduced the Gemini Earn product in February 2021, which ran until January 8, 2022. Through the product, Gemini and Genesis offered customers the ability to earn yield by lending their crypto assets to Genesis. The SEC claims that the two firms did not properly register the partnership as a lending partnership with the relevant authorities, resulting in the unregistered securities charges.
The situation has become worse for Genesis after the collapse of FTX. The firm has had liquidity issues and has even paused withdrawals due to the turmoil. This has caused investors to lose trust in the firm, as they are unable to withdraw their assets.
The SEC has now filed charges against Gemini and Genesis, accusing them of selling unregistered securities. This could have major implications for the two firms, as it is illegal to sell securities without registering them with the proper authorities. The SEC has warned investors to be cautious when investing in crypto assets as they may be exposed to risks of fraud and manipulation.
The news of the charges has already had an effect on the crypto market, with many investors selling off their assets in fear of potential losses. The SEC has stated that it is committed to protecting investors and will continue to investigate any potential violations of the law.
It remains to be seen how the SEC’s charges against Gemini and Genesis will play out. For now, investors should be aware of the risks associated with investing in crypto assets and should always ensure that they are properly registered with the relevant authorities.