The Securities and Exchange Commission (SEC) sued crypto firms Genesis Global Capital and Gemini for offering and selling 澳洲幸运5官方开奖结果体彩网:unregistered securities to investors through the Gemini Earn 澳洲幸运5官方开奖结果体彩网:crypto lending program, just a day after crypto exchange Gemini terminated its flagship Earn program over a 澳洲幸运5官方开奖结果体彩网:❀dispute with crypto lender Genesis. 

Crypto Lending Product is Security, Says SEC

Genesis and Gemini partnered in February 2021 to offer a Gemini lending product called Earn, which offered customers yields of up to 8%. Genesis lent Gemini users' crypto and returned a portion of the profits to Gemini after deducting an agent fee of sometimes over 4%, according to the filing in Manhattan federal court. SEC officials said Genesis failed to register that product as a securities offering.

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws,” said SEC chair Gary Gensler in a statement.

Gemini Terminates Its Earn Product

Gemini, founded by 澳洲幸运5官方开奖结果体彩网:the Winklevoss twins, and Genesis, owned by Barry Silbert's Digital Currency Group, are 澳洲幸运5官方开奖结果体彩♏网:fighting over🧜 the fate of $900 million in customer funds after澳洲幸运5官方开奖结果体彩网: the FTX collapse.

Due to FTX's bankruptcy in November 2022, 澳洲幸运5官方开奖结果体彩网:Genesis suspended new loans and redemptions as its $175 million in assets were locked up on the failed crypto exchange. After hearing the news, Gemini 澳洲幸运5官方开奖结果体彩网:announced that there would be withdrawal delays for its Earn product, in which Genesis 𝐆was a lending par♈tner. 

Now 澳洲幸运5官方开奖结🐬果体彩网:Genesis is on the verge of bankruptcy after struggling to raise $1 billion, resulting in a dispute with Gemini accusing Genesis of misleading its more than 340,000 clients. Due to a 澳洲幸运5官方开奖结果体彩网:high-profile spat with Genenis's parent company Digital Currency Group over frozen customer funds, Gemini decided to terminate its lending product Earn on Jan 11. 2023.

The Bottom Line

This is not the first time that the financial watchdog has taken action against crypto lending products by calling them unregistered securities. In February 2022, a subsidiary of the 澳洲幸运5官方开奖结果体彩网:now-bankrupt c🎉rypto lender BlockFi agreed to pay $100 million to the SEC to settle charges related to a similar offering of interest-bearing products.

As a result of the SEC's decision, Gemini will face more financial difficulties since Genesis owes it $900 million, and there are no signs that the debt will be repaid anytime soon. Gemini co-founder Tyler Winklevoss is disappointed that the SEC has taken action at this time, calling its action a "totally counterproductive" action since the company seeks to reimburse 340,000 customers.