JAKARTA Recently, crypto exchange Gemini and Genesis were accused of offering securities sales that were not registered by the US Securities and Exchange Commission (SEC). The US regulator claims Gemini Earn's program initiated by Gemini and Genesis is no longer working.
This was conveyed by the SEC in an announcement on January 12. Then, SEC chairman Gary Gensler stated that Gemini tricked a number of requirements aimed at providing protection to investors.
"We allege that Genesis and Gemini offer unregistered securities to the public, bypassing disclosure requirements designed to protect investors. Today's accusations are built on previous actions to clarify... that crypto lending platforms and other intermediaries must comply with our time-tested securities laws," said SEC chairman Gary Gensler.
In addition to accusing Gemini Earn's program of offering and selling unregistered securities. Regulators further accused Genesis and Gemini of carrying billions of US dollars worth of cryptocurrencies from users of its platform amounting to hundreds of thousands.
Preliminary Gemini Earn Program
For your information, Genesis and Gemini signed an agreement in December 2020 leading to the launch of Gemini Earn in February 2021. This service allows Gemini users, through a three-party agreement, to lend assets to Genesis in exchange for interest on the deposit.
Genesis then halted Earn's (withdrawal) withdrawal in November 2022, citing a lack of liquidity caused by market conditions at the time of FTX's collapse. The SEC said that Genesis Earn holds a $900 million crypto asset owned by 340,000 Gemini Earn users at the time of the withdrawal. The issue has drawn a lot of controversy in recent months, and it has been part of the SEC's recent complaint.
However, the SEC is also at the center of attention for questioning Gemini's practices when the service operates. The SEC revealed that Gemini had raised agent fees of 4.29 percent.
In addition, US regulators also pointed out that Gemini raised investor-owned Earn funds with other funds. Not stopping there, Gemini is accused of investing the funds in its own policies. The reason is, the deal related to Gemini Earn does not clearly mention the use of investor assets.
Not Registered at the SEC
As reported by CryptoSlate, the lawsuit filed by the SEC also shows that Gemini Earn's agreement is not listed on the SEC as required by federal securities law. It also alleges that Gemini and Genesis made "selective and inadequate disclosures" and says both companies promote Gemini Earn to the public as an investment.
The SEC seeks to order the two companies to no longer violate certain securities regulations. It also aims for the two companies to release or hand over profits obtained illegally and pay interest and fines for these profits.
Today's filing doesn't show exactly how much Genesis and Gemini may owe the SEC. It also doesn't show exactly which services, if any, might have been prevented from being offered by the two companies
Earn users are now unable to withdraw their funds for two months, and the program is officially and permanently suspended on Tuesday, January 10. It's unclear if the SEC's actions will help users regain funds on their accounts.
Gemini boss Protested
Gemini founder and CEO Tylerviss brothers expressed his disapproval of the SEC's actions. According to him, regulators prioritize political aspects rather than helping Gemini crypto exchanges in carrying out Gemini Earn's problems.
He also considered that the SEC did not give his side a year but instead announced his actions to the press. Bangkavoss considered the action unfair.
"Despite this ongoing conversation, the SEC chose to announce their lawsuit to the press before informing us. It is very lame. It is unfortunate that they are optimizing political points instead of helping us advance the cause of 340,000 Earn users and other creditors," said CEO Gemini.
For your information, Gemini is one of the leading US crypto exchanges trading cryptocurrencies. First founded in 2013 by Cameron and Tyler▁UUvoss. The two then launched the Gemini platform to the public in 2015 and owned an office located in New York, USA.
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