Winklevoss pairs crypto firm to sell unregistered securities – Reuters

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The SEC accused Genesis and Gemini of illegally raking in billions from loan schemes

The U.S. securities regulator on Thursday accused Genesis Global Capital and crypto exchange Gemini of offering and selling unregistered securities to retail investors through a program that promised high interest rates on deposits.

The Securities and Exchange Commission claimed that Genesis, a subsidiary of Digital Currency Group, and Gemini, led by Tyler and Cameron Winklevoss, raised billions of dollars in crypto assets from hundreds of thousands of investors through unregistered offers, using Gemini’s Earn crypto asset. -loan program and “circumvention of disclosure requirements designed to protect investors”.

“Today’s charges build on prior actions to make it clear to the market and the investing public that crypto lending platforms and other intermediaries must comply with our time-tested securities laws. This best protects investors. It promotes confidence in the markets. It is not optional. It’s the law,” SEC Chairman Gary Gensler said in a statement.

The complaint states that Genesis has partnered with Gemini on the program which allows customers to lend their crypto assets to Genesis in exchange for high interest payments. Gemini facilitated the trades and deducted an agent fee of up to 4.29% from the returns it received from Genesis, according to the SEC.

In November, citing a liquidity crunch following volatility in the crypto market following the collapse of major crypto exchange FTX, Genesis froze withdrawals, leaving around 340,000 Earn clients unable to withdraw around $900 million in cash. crypto assets.

“The recent collapse of crypto asset lending programs and the suspension of the Genesis program underscores the critical need for platforms offering securities to retail investors to comply with federal securities laws,” the director said. of the SEC’s Division of Enforcement, Gurbir S. Grewal, told me.

The regulator’s complaint seeks the return of any “ill-gotten gains” plus interest, and all civil penalties.

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