Genesis Global Capital has reached an agreement to pay a civil penalty of $21 million as part of a final court judgment to resolve charges related to the Gemini Earn lending program. The charges were brought against Genesis and Gemini for conducting an unregistered securities offering when they launched the Gemini Earn crypto lending program for retail investors.
According to Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), the settlement dictates that the SEC will only receive a portion of the penalty after other bankruptcy payments, including claims by retail investors, have been fulfilled.
The $21 million fine marks the conclusion of the SEC’s lawsuit against Gemini and Genesis, which was initiated in January 2023 for selling unregistered securities through the Gemini Earn program.
In November 2022, Genesis halted user withdrawals on its platform, when Gemini Earn had approximately 340,000 customers and $900 million in assets under management, as stated in the SEC announcement.
This penalty follows Gemini’s recent agreement to pay a $37 million fine for multiple compliance failures that jeopardized the company’s safety and stability, according to Superintendent Adrienne Harris of the New York State Department of Financial Services (NYDFS) in a statement on Feb. 28.
The $37 million penalty is part of the settlement between Gemini and the NYDFS, which will require Gemini to return at least $1.1 billion to customers of the Gemini Earn program through the Genesis bankruptcy proceeding.
Gemini stated that if approved by the bankruptcy court, Earn users can expect to receive 100% of their cryptocurrency assets back, along with any appreciation.
According to Recharge Capital Managing Partner, an Ether ETF is less likely to be approved compared to a Bitcoin ETF.