Yesterday the Securities and Exchange Commission (SEC) filed a lawsuit (full text here) against Winklevoss-owned Gemini Trust and DCG-owned Genesis Capital over the Gemini Earn offer. Gemini Earn allowed consumers to deposit cryptocurrencies that were lent to Genesis Capital in return for interest. The product has been withdrawn, but almost $900 million relating to 340,000 accounts is locked with crypto lender Genesis Capital which stopped allowing withdrawals in November 2022 owing to loans extended to bankrupt Alameda.
The lawsuit alleges that both parties were involved in an unregistered securities offering that harmed hundreds of thousands of investors. “Gemini itself repeatedly described Gemini Earn as an investment on its website,” states the lawsuit.
“The recent collapse of crypto asset lending programs and the suspension of Genesis’ program underscore the critical need for platforms offering securities to retail investors to comply with the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
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