One more problem – US authorities are monitoring developments for Gemini customers who have loaned their cryptocurrencies to Genesis and who cannot recover their assets. The SEC went on the offensive, filing a lawsuit against both companies.
Profit program: SEC files complaint against Gemini and Genesis
In one communicate on January 12, the SEC announced that it has filed a complaint against Genesis Global Capital and Gemini, for selling unregistered securities to retail investors under the Earn program.
The SEC has detailed the working mechanism of these crypto loans. She recalled that the two parties reached an agreement in December 2020 to allow Gemini customers, lend their cryptocurrencies to Genesis. In return, customers would receive rewarding interest.
In this scheme, the SEC considers that the Twins have acted as an intermediary that facilitates transactions, and that received a relatively high commission of up to 4.29%.
As for Genesis, the company used cryptocurrencies, at his discretionto generate income, which in particular should allow it to pay this rewarding interest to users of the Earn program.
Suspension of withdrawals for Earn: a boon for the SEC
Chairman of the SEC, Gary Gensler, described this lawsuit. It would be based on “previous actions” as a clear indicator for the market and investors. For the regulator, it is essential that crypto lending platforms as well as brokers match with securities laws.
Gary Gensler defended the merits of this complaint against Genesis and Gemini, noting that this compliance allows for “the best protection for investors” and that it “promotes confidence in the markets.” He insisted that following these rules is not optional, that ” it is the law “.
The suspension of withdrawals from the Earn program in November of last year, after Genesis’ crypto reserves proved insufficient to process withdrawals, is an argument in favor from these words of Gary Gensler.
Escaping liability and counterproductive legal action: The Winklevoss brothers speak out
Genesis is still unable to find a solution that can allow withdrawals to reopen for Gemini customers using the Earn program. These liquidity problems and the attitude of Genesis CEO Barry Silbert, who had surrounded himself with silence, ended irritates the Winklevoss brothers.
In an open letter on January 2, Cameron Winklevoss criticized opened, Genesis CEO Barry Silbertwhom he accuses – on the main lines – avoid its responsibilities in relation to these assets of Earn users, having used these funds in an irresponsible manner.
As friction between the two partners already complicates the search for a solution, the SEC adds another layer. This time it’s Tyler Winklevoss assembled in the niche, criticizing the conduct of the SEC, which would be ” completely counterproductive “.
The Gemini co-founder said he was disappointed with the regulator’s action because Gemini and creditors would work to recover funds from Earn users. Tyler Winklevoss also expressed regret that the agency announced this complaint to the press before informing the crypto exchange, while discussions about the crypto loan program would have taken place with the SEC. for 17 months.
Genesis owes creditors at least $1.8 billion. The SEC believes it is doing its job by filing charges against the company and the Twins. But will this legal action allow Earn users to recover their assets?
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