United States of America: Announced lawsuit involving alleged violations of 1933 Securities Act in cryptoassets programme (SEC vs Genesis and Gemini)

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Description

Announced lawsuit involving alleged violations of 1933 Securities Act in cryptoassets programme (SEC vs Genesis and Gemini)

On 12 January 2023, the US Securities and Exchange Commission (SEC) filed a complaint against Genesis Global Capital and Gemini Trust Company under the Southern District Court of New York against Genesis and Gemini for an alleged unregistered offer and sale of securities. The SEC claims that Genesis and Gemini violated Sections 5a and c of the 1933 Securities Act. According to the complaint, Genesis and Gemini, through their Earn crypto asset lending programme, collected billions of dollars worth of crypto assets from investors since December 2020. Under the programme, Genesis offered Gemini customers the option to loan their crypto assets to Genesis in exchange for paid interest, and Gemini benefited from an agent fee on the returns. The SEC stated that Genesis in November 2022 announced it would not allow its Gemini Earn investors to withdraw their crypto assets due to the lack of sufficient liquid assets to satisfy the withdrawal requests. The SEC argued that the Gemini Earn program represents an offer and sale of securities, which requires prior registration with the Commission. The filed complaint asks the court for injunctive relief, civil penalties and repayment of ill-gotten gains.

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Scope

Policy Area
Authorisation, registration and licensing
Policy Instrument
Business registration requirement
Regulated Economic Activity
digital payment provider (incl. cryptocurrencies)
Implementation Level
national
Government Branch
executive
Government Body
other regulatory body

Complete timeline of this policy change

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2023-01-12
under deliberation

On 12 January 2023, the US Securities and Exchange Commission (SEC) filed a complaint against Genes…

2024-03-19
under investigation

On 19 March 2024, the Securities and Exchange Commission announced the closure of its lawsuit again…