The post Breaking: Genesis Agrees To Make Settlement With SEC Over Gemini Earn With $21 Million Penalty appeared first on Coinpedia Fintech News

In a significant development in the Genesis and Gemini lawsuit by the U.S. Securities and Exchange Commission (SEC), Genesis Global Capital has decided to settle with the SEC and agreed to pay $21 million to settle the charges for violating securities laws for its role with the now-inoperative Gemini Earn program, the SEC announced Tuesday.

According to an official press release by the US SEC on March 19, Genesis Global Capital has agreed to pay a $21 million penalty and a permanent injunction that it sold unregistered securities. The SEC will receive the penalty after the bankruptcy court notifies the completion of all payments of claims, including claims by retail investors in the Gemini Earn program.

“We charged Genesis with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors,” quoted SEC Chair, Gary Gensler.

SEC’s take on the settlement

In the press release by the SEC, the SEC chair underscored that today’s settlement builds on previous actions to make it clear to the investors as well as the marketplace that the crypto lending platforms need to comply with the SEC’s time-tested security laws. He also included that the law is not something optional, and is to protect the investors and promote trust in the market.

Genesis had suspended user withdrawals on its platform in November 2022, when Gemini Earn had around 340,000 customers and $900 million in assets under management, according to the SEC announcement. This development comes three weeks after Gemini agreed to pay a $37 million penalty over multiple compliance failures.

Investors to get their assets back on approval by bankruptcy court

“The collapse of the Gemini Earn program underscores the unknown risks that investors are exposed to when market participants fail to comply with the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “As this enforcement action makes clear, no amount of hype and advertising can substitute for the investor-protection disclosures required by the federal securities laws.”

The $21 million fine is the end of the lawsuit initiated by the SEC against Gemini and Genesis in January 2023 for selling unregistered securities through the Gemini Earn program. If approved by the bankruptcy court, Gemini has said that it expects Earn users to receive 100% of their crypto assets along with appreciation.