<p>The US <a href="https://www.financemagnates.com/terms/s/securities-and-exchange-commission-sec/" target="_blank" id="3718b4df-fc5f-479a-861e-f52759439c15_1" class="terms__main-term">Securities and Exchange Commission (SEC</a>) charged two feuding companies, Genesis Global Capital and Gemini Trust Company, for offering and selling crypto lending products under Gemini Earn, which the regulator alleged to be unregistered securities.</p><p>SEC Charges Genesis and Gemini for Selling Unregistered Securities</p><p>"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," said the Chairman of the SEC, Gary Gensler. Further, the SEC is fighting a lengthy court battle with Ripple as it labeled XRP as unregistered securities.</p><p>The regulatory action was put in place on Thursday when the lending platform halted withdrawals, and its customers could not take out their deposits. Gemini and its Co-Founders are already <a href="https://www.financemagnates.com/cryptocurrency/news/gemini-winklevoss-twins-face-class-action-lawsuit-over-lending-products/" target="_blank" rel="follow">facing a class-action lawsuit</a> brought by two Gemini Earn investors with similar charges. That lawsuit accused the exchange and its owners of fraud and violations of the Exchange Act.</p><p>"Today's charges build on previous actions to make clear to the marketplace and the investing public that <a href="https://www.financemagnates.com/terms/c/crypto-lending/" target="_blank" id="f93b5d7e-2219-4a1d-a7a8-bbcf45e69e8c_2" class="terms__secondary-term">crypto lending</a> platforms and other intermediaries need to comply with our time-tested securities laws," Gensler added.</p><p>Earlier, a media report revealed that the US Department of Justice's Eastern District of New York (EDNY) is <a href="https://www.financemagnates.com/cryptocurrency/us-doj-and-sec-are-reportedly-probing-digital-currency-group/" target="_blank" rel="follow">probing Genesis' parent</a>, but that has not brought in any criminal charges as of yet.</p><p>Check out the FMLS22 session on "Defi VS Cefi: Charting New Landscape?"</p><p>Genesis Stopped Paying Lending Customers</p><p>Though Gemini was offering lending products under its brand, the US regulator highlighted that the company was acting as an agent to facilitate the transaction. Digital Currency Group's subsidiary Genesis paid the interest for the lending products under an agreement the two companies signed in December 2020.</p><p>However, the troubles started in November with the collapse of the FTX crypto exchange and Genesis' exposure to it. The company faced a liquidity crunch and halted the withdrawal of about 340,000 customers of the Earn Product, with assets of around $900 million.</p><p>Now, the regulator wants to permanently stop the two companies from offering such products and seeks to recover customer funds held under the lending program, along with civil penalties.</p><p>Meanwhile, Cameron Winklevoss, the Co-Founder of the crypto exchange Gemini, accused the CEO of Digital Currency Group, Barry Silbert, of <a href="https://www.financemagnates.com/cryptocurrency/winklevoss-feud-with-genesis-leads-to-earn-users-class-action-request/" target="_blank" rel="follow">acting out using "bad faith stall tactics"</a> to resolve the payment of a $900 million debt.</p>
This article was written by Arnab Shome at www.financemagnates.com.
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