Settled with SEC in unregistered securities lawsuit

Genesis, a cryptocurrency financing company that went bankrupt in 2023, and the U.S. Securities and Exchange Commission (SEC) have reached a settlement in which Genesis will pay approximately 3.1 billion yen ($21 million) to the SEC.

According to a bankruptcy court filing dated Jan. 31, the settlement agreement is the result of negotiations between the SEC and Genesis and resolves claims in a civil lawsuit filed by the SEC. This eliminates the risks, costs and uncertainties associated with protracted litigation with the SEC.

Genesis’ advisors also concluded that the settlement agreement was in the best interest of Genesis’ estate and its creditors.

As background, the SEC filed a lawsuit in January last year alleging that the yield service “Gemini Earn” operated by Genesis and the virtual currency exchange Gemini falls under the offering and sale of unregistered securities. Ta.

Gemini Earn was a service that allowed customers to lend cryptocurrencies to Genesis through Gemini and earn interest.

Now, Genesis has agreed to pay a fine and settle the case without admitting or denying the wrongdoing alleged by the SEC. According to court documents, Genesis will be able to focus on repaying funds to customers and other creditors.

Genesis plans to repay customers in cash or virtual currency, depending on the type of currency they deposited into Gemini Earn. The company plans to ask the court to approve the bankruptcy plan on February 14th.

connection: U.S. SEC sues Gemini and Genesis for violating securities laws

Settlement with New York state authorities

Genesis also reached a settlement with the New York Department of Financial Services (NYDFS) in January. The company has agreed to pay a fine of approximately 1.2 billion yen ($8 million) and cease operations in New York.

Last October, New York Attorney General Letitia James filed a lawsuit against Gemini, Genesis, and Genesis’ parent company Digital Currency Group (DCG).

The lawsuit alleges that Gemini hid the risks of investing in Genesis and that Genesis lied to the public about its losses.

connection: New York State Attorney General files suit against Gemini and Genesis for alleged investor fraud

SEC vs. Binance and Coinbase court case

The SEC is currently engaged in a lawsuit with Binance, Coinbase, and others that primarily focuses on unregistered securities.

In the SEC v. Binance case, the two sides are arguing over whether additional documentary evidence or witnesses are needed. The main point of contention in the court case is the definition of what constitutes “securities.”

Regarding the lawsuit against Coinbase, a senior litigation analyst at Bloomberg opined in January that Coinbase has about a 70% chance of success.

connection: U.S. SEC and Binance clash over unregistered securities lawsuit over need to submit evidence

connection: Bloomberg Senior Litigation Analyst “Coinbase has the upper hand in lawsuit against SEC, 70% chance of success”

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