SEC indicts two crypto firms for failing to disclose risks to investors

Now the Securities and Exchange Commission is trying to do something about it. On Thursday, regulators charged Gemini and Genesis, another company that does business with Gemini, for not registering securities. This is an attempt to hold the company accountable, and it can cause damage to repay investors.

The SEC has set its sights on Gemini Earn, a program that promises high-yield returns to consumers by depositing money in these crypto accounts. It brought the same accusations against Genesis.

“Genesis and Gemini allege they offered unregistered securities to the public by circumventing disclosure requirements designed to protect investors,” SEC Chairman Gary Gensler announced indictment. It said in a statement that registration was “not an option. That’s the law.”

The SEC’s move is part of government efforts to hold crypto companies accountable for massive customer losses since the collapse of crypto exchange FTX in November sent ripples through the industry. The SEC and the Commodity Futures Trading Commission recently each filed complaints against FTX co-founder Sam Bankman-Fried with the same goals in mind.

Gemini offers its customers higher rates in exchange for borrowing money. This is the bank of the freewheeling crypto world. Gemini says it can’t return the consumer’s money because Genesis hasn’t refunded Gemini. Genesis denies that claim.

As a result, about $900 million is frozen in Gemini Earn, and it is not known when customers will be able to access it.

Gemini co-founders Cameron and Tyler Winklevoss are known provocateurs in Silicon Valley. The twin brothers were former Harvard Olympians suing Mark Zuckerberg, claiming he and his partner stole the Facebook idea from the company they founded. Once one of the crypto lending platforms, they established themselves as early crypto adopters and became some of the most successful entrepreneurs in the industry.

A big reason for its popularity was Earn, which has promised high returns since it launched almost two years ago.

Genesis is part of Digital Currency Group (DCG), a conglomerate run by financial mogul Barry Silbert, whose wealth management firms include Grayscale Investments and news platform CoinDesk.

Neither Gemini’s Cameron Winklevoss nor a representative for Genesis responded to a request for comment.

SEC has previously attempted to use this authority. In early 2022, the agency billed her cryptocurrency lender BlockFi, reaching a $100 million settlement.

SEC officials told reporters on Thursday that the moves against Gemini and Genesis are part of a larger plan to go after crypto companies that aren’t registered as securities. stated that he did not distinguish between Gemini and Genesis.