Crypto Lender Genesis Settles SEC Lawsuit Over Gemini Earn Program
Bankrupt crypto lender Genesis has agreed to pay a $21 million civil fine to settle a lawsuit with the U.S. Securities and Exchange Commission (SEC) regarding its now-defunct Gemini Earn program. The settlement will allow Genesis to focus on repaying customers and creditors instead of defending itself against the SEC’s claims that it sold unregistered securities through its partnership with Gemini. Although Genesis did not admit any wrongdoing, the settlement will enable the company to move forward.
Genesis and Gemini Collaboration
In 2020, Genesis and Gemini collaborated to offer Gemini customers the opportunity to loan out their digital assets and earn interest. However, shortly after Genesis filed for bankruptcy in January 2023, the SEC sued the crypto lender for allegedly selling securities illicitly through the Earn program and earning billions of dollars in interest.
Legal Troubles and Fines
In addition to the SEC lawsuit, Genesis faced legal troubles with Gemini’s parent company, Digital Currency Group (DCG), which sued them for failing to repay hundreds of millions of dollars from the Earn program. Furthermore, in January 2024, Genesis was fined $8 million by the New York State Department of Financial Services (DFS) for inadequate cybersecurity measures.
Repayment Plan
Genesis plans to repay its customers in cash or cryptocurrency assets and aims to have its repayment plan approved by the court on February 14th.
Hot Take: Genesis Resolves Legal Issues but Faces Repayment Challenges
Crypto lender Genesis has reached a settlement with the SEC, putting an end to a legal battle over its partnership with Gemini. While this allows Genesis to focus on repaying customers and creditors, challenges lie ahead as the company navigates bankruptcy and attempts to restore trust. The $21 million civil fine marks a significant setback for Genesis, which had already faced an $8 million fine from the DFS earlier. Moving forward, Genesis will need to implement robust cybersecurity measures and ensure transparent operations to regain confidence in the crypto lending industry.
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