• The US Securities and Exchange Commission (SEC) has filed charges against Gemini and Genesis accusing the two of selling unregistered securities through the Gemini Earn product.
• The Gemini Earn product allowed Gemini and Genesis to earn billions of dollars from investors despite the product being unregistered.
• Genesis found itself in turmoil after the FTX’s collapse and even paused withdrawals due to liquidity issues.
The US Securities and Exchange Commission (SEC) has recently filed charges against Gemini and Genesis, two cryptocurrency companies, for selling unregistered securities through the Gemini Earn product. The Gemini Earn product was launched in February 2021 and allowed investors to earn yield by lending their crypto assets to Genesis. The partnership between Gemini and Genesis enabled the two companies to earn billions of dollars from investors despite the product being unregistered.
The SEC alleges that the two companies failed to register their partnership as a lending partnership with the relevant authorities and as a result, misrepresented their business model by advertising returns of up to 8% to clients. This failure to register their partnership has now resulted in the SEC taking action against them.
In addition to the SEC charges, Genesis has also been having liquidity issues after the FTX’s collapse and has had to pause withdrawals to date. This has been a cause of concern among the investors and has led to many questioning the safety of their assets.
The SEC has now called on Gemini and Genesis to register their partnership as a lending partnership and to ensure that all investors are informed of the risks associated with investing in unregistered securities. The SEC has also urged investors to be wary of investing in products not registered with the SEC and to make sure they understand the risks associated with such investments.
It remains to be seen how this case will be resolved and whether Gemini and Genesis will be able to comply with the SEC’s demands. In the meantime, investors are advised to be extra cautious when investing in such products and to make sure that they understand the risks associated with them.