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The U.S. Securities and Exchange Commission has alleged that Genesis Global Capital and cryptocurrency exchange Gemini are selling unregistered securities through a popular program that is supposed to pay high interest on cryptocurrency deposits. We tracked two prominent companies in the cryptocurrency community.
Thursday’s SEC lawsuit is against Gemini, which is run by Tyler and Cameron Winklevoss, better known as the creators of the disputed Facebook, and Genesis has filed multiple lawsuits after last year’s crash in cryptocurrency prices. It is part of a broader crackdown on cryptocurrencies by US government agencies. , exposing most retail investors to billions of dollars in losses.
Tyler Winklevoss called the lawsuit a “parking ticket” and vowed to defend the company.
The lawsuit involves a program known as Gemini Earn, which allows individuals to deposit cryptocurrencies in turn at interest rates as high as 4.29%. Gemini and Genesis will then lend those cryptocurrencies to other investors.
However, last year’s crash in cryptocurrency prices forced many cryptocurrency lenders out of business, into bankruptcy, or downsized their businesses dramatically. Voyager Digital, Celsius, and FTX (whose founders were indicted last month) were all platforms with various forms of deposit and lending operations.
The SEC argues that Gemini Earn was effectively an offering and sale of securities and that the program should have been registered with US authorities. Additionally, with cryptocurrency prices crashing, Genesis had to freeze withdrawals from its Gemini Earn program, and according to the SEC, customers are now losing about $900 million.
Under Chairman Gary Gensler, the SEC has for some time claimed to have legal powers to regulate cryptocurrencies.
“Today’s request builds on previous actions to make clear to markets and investors that cryptocurrency lending platforms and other intermediaries must comply with proven securities laws,” Gensler said in a statement. is based on,” he said.
The cryptocurrency industry, its lobbyists, and friends in Congress have lashed out at the SEC and urged the smaller Commodity Futures Trading Commission to oversee crypto.
Tyler Winklevoss says: twitter The Gemini Earn program is regulated by the New York Department of Financial Services, and has been in talks with the SEC about Earn for over a year and a half. He said the SEC had no issues with the Earn program until withdrawals were suspended in November in the aftermath of FTX’s bankruptcy.
“We look forward to protecting ourselves from this forged parking ticket,” said Winklevoss. “And we don’t want this to distract us from the critical recovery work we’re doing.”
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