Genesis Global Capital, LLC has agreed to a $21 million penalty to settle charges brought against the firm by the Securities and Exchange Commission (SEC). This matter involves allegations by the regulator that the crypto lending platform offered unregistered securities to the public.

The SEC accused Genesis of failing to register the Gemini Earn program, a crypto lending product jointly managed with the cryptocurrency exchange Gemini. The regulator maintains that the offering breached the disclosure requirements designed to safeguard investors.

The Unregistered Offer

The SEC's Chair, Gary Gensler, mentioned: "We charged Genesis with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors."

"Today's settlement builds 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. Doing so best protects investors. It promotes trust in markets. It's not optional. It's the law."

Genesis' involvement in the Gemini Earn program, which promised interest payments on crypto assets loaned to the company, attracted substantial attention until its collapse in November 2022.

Regulatory Response

Genesis and Gemini Trust Company, LLC were charged on January 12, 2023. Subsequently, Genesis filed for bankruptcy following the collapse of the Gemini Earn program, leaving investors unable to access their assets.

The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, resulted in Genesis consenting to a final judgment, including the $21 million civil penalty and a permanent injunction.