Crypto News- Genesis Global, the crypto lending platform, has reached an agreement with the U.S. Securities and Exchange Commission (SEC) in connection with its troubled Gemini Earn lending initiative, which is currently entangled in bankruptcy proceedings.
Under the terms of the settlement disclosed in U.S. Bankruptcy Court in Manhattan on Wednesday, Genesis will pay a $21 million civil penalty, contingent upon full reimbursement of customers during its ongoing bankruptcy case.
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While neither admitting nor denying any wrongdoing, Genesis has opted for this resolution to avoid the costs and uncertainties associated with battling the SEC’s accusations of illicit securities sales. The company is now focused on meeting its financial obligations to customers and other creditors as it navigates through bankruptcy.
The $21 million penalty will only be imposed if Genesis successfully fulfills its commitments to creditors. To expedite the resolution and simplify the bankruptcy process, Genesis is advancing a liquidation plan designed to repay customers in either cash or cryptocurrency, depending on the deposited currency types in the Earn program. The bankruptcy plan is set for court approval on February 14.
Approval of this settlement by a bankruptcy judge would represent a significant stride in resolving the legal entanglements linked to the Gemini Earn program.
Genesis, facing potential industry restrictions, came under SEC scrutiny just before filing for bankruptcy protection in January 2023. The SEC lawsuit targeted Genesis and Gemini Trust, co-operators of the Gemini Earn initiative.
Launched in December 2020, Gemini Earn allowed customers to lend their crypto assets to Genesis, accumulating substantial amounts in crypto assets during its operation. SEC allegations claimed both companies illegally sold securities to hundreds of thousands of investors. The partnership halted amid a crypto market downturn in November 2023, triggering legal disputes involving Genesis, Gemini, and Genesis’s parent company, Digital Currency Group (DCG).
Simultaneously, Genesis, Gemini, and DCG are contending with a parallel enforcement action initiated by New York Attorney General Letitia James. The Attorney General aims to bar these entities from the financial investment industry in New York, seeking restitution for affected investors and the disgorgement of ill-gotten gains.