Genesis agrees to settle SEC lawsuit for $21 million

Genesis Global and its affiliated entities have settled with the Securities and Exchange Commission (SEC), agreeing to a $21 million penalty to resolve claims over the unregistered sale and offer of securities, according to a court filing.

The settlement, filed on Jan. 31 in the U.S. Bankruptcy Court for the Southern District of New York., comes after months of rigorous negotiations and is a significant step in Genesis’ ongoing bankruptcy process.

The lawsuit

The lawsuit by the SEC, launched in January 2023, centered on charges that Genesis and Gemini contravened U.S. securities laws through their crypto lending program spanning from February 2021 to November 2022.

The lawsuit was filed shortly after Genesis suspended withdrawals from its platform in November 2022, leading to its bankruptcy filing in January 2023. Under the terms of the settlement, Genesis neither admitted to nor denied the allegations of wrongdoing.

The settlement marks a critical juncture for Genesis amidst its bankruptcy proceedings, offering a clearer pathway to fulfilling its financial obligations to customers and creditors. It seeks to mitigate the financial and operational uncertainties brought about by the litigation, thus allowing the firm to concentrate on restructuring its operations and repaying affected parties.

Furthermore, the settlement addresses the SEC’s civil action claim within Genesis’s Chapter 11 bankruptcy cases, signifying a move towards resolution and operational recovery for the company.

The lawsuit and the resulting settlement are part of a broader narrative of regulatory engagement and enforcement within the cryptocurrency sector, spotlighting the legal and regulatory complexities faced by entities operating in this space.

Gemini Earn

The Gemini Earn program was designed to provide Gemini customers with a way to earn interest on their crypto holdings by lending them to Genesis. However, the program came under significant pressure during the cryptocurrency market downturn in November 2022, leading to Genesis suspending withdrawals and ultimately filing for bankruptcy in January 2023.

The fallout from the failed Gemini Earn program and the subsequent legal and financial challenges highlighted the complexities and risks associated with crypto lending platforms, especially those operating without clear regulatory approval.

The lawsuit and the resulting $21 million settlement with the SEC reflect the importance of compliance with securities laws and the regulatory authority’s commitment to enforcing these laws to protect investors in the digital asset space.

The post Genesis agrees to settle SEC lawsuit for $21 million appeared first on CryptoSlate.

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