Genesis Global Settles for $21 Million with SEC in Crypto Crackdown

• Genesis Global Capital agreed to pay a $21 million penalty to settle SEC charges over the failed Gemini Earn crypto lending product, which the SEC alleged was an unregistered securities offering.
• Genesis will pay the fine without admitting or denying the allegations. Gemini, which partnered with Genesis on the product, said it disagrees with the SEC’s interpretation but believes the settlement allows the companies to move forward.
• The SEC action demonstrates increased regulatory scrutiny of crypto lending platforms after failures like Celsius Network. More enforcement is likely as the SEC asserts authority over the industry.

The digital asset lender Genesis Global Capital has agreed to pay a $21 million civil penalty to settle charges brought by the U.S. Securities and Exchange Commission (SEC) over the failed Gemini Earn crypto lending product.

SEC Charges Against Genesis & Gemini

The SEC had alleged that Gemini Earn was an unregistered securities offering. Last week, a judge denied motions by Genesis and Gemini to dismiss the case. This settlement comes just days after that ruling.

Details of the Settlement

Under the terms of the deal, Genesis will pay the $21 million penalty without admitting or denying the SEC’s allegations. The SEC said the settlement demonstrates its commitment to protecting investors in the crypto lending space.

Reaction From Gemini

In a statement, Gemini said it disagrees with the SEC’s interpretation but believes the Genesis settlement allows the companies to put the matter behind them. Gemini said it looks forward to working with regulators to bring regulated lending products to market.

The Future of Crypto Lending

The collapse of crypto lenders like Celsius Network last year has led to increased scrutiny from the SEC. More enforcement actions are likely on the horizon as the agency asserts its authority over crypto lending platforms. Companies like Genesis and Gemini now face an uphill battle to revive their lending businesses.

Conclusion

The Genesis settlement underscores the risks posed by unregulated crypto lending products. While Gemini may have avoided penalties for now, the SEC’s crackdown on the industry is far from over. Companies that fail to register securities offerings or mislead customers face severe consequences.