Valuable Development: SEC Sues Famous Bitcoin Exchange!

Valuable Development: SEC Sues Famous Bitcoin Exchange!
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The U.S. Securities and Exchange Board (SEC) seems to have its eye on a cryptocurrency exchange. According to the latest developments, Gemini, one of the famous Bitcoin exchanges, was accused by the SEC of selling unregistered securities through the “Earn” program. Here are the details…

SEC crackdown on Bitcoin and altcoin exchange Gemini

On January 12, the United States Securities and Exchange Committee (SEC) filed a lawsuit against cryptocurrency lending firm Genesis Global Capital and crypto exchange Gemini’s program. He claimed that Gemini offered unregistered securities through its “Earn” program. In December 2020, Genesis, a subsidiary of crypto conglomerate Digital Currency Group (DCG), signed an agreement with Gemini to offer returns-yielding crypto artifacts to the exchange’s clients. The service was later launched in February 2021.

SEC

Under the deal, Gemini customers would be able to lend their cryptos to Genesis with a commitment that Genesis would repay the loan with interest. Additionally, Genesis had full control over how it would generate returns to repay Gemini creditors. The SEC said in a statement that the Gemini Earn program deals with the offering and selling of securities. For this reason, he argued that it should be recorded in the committee. SEC Leader Gary Gensler used the following terms in a statement:

We argue that Genesis and Gemini offer unregistered securities to the public, bypassing disclosure requirements designed to protect investors.

Gensler stated that the arguments are “based on previous actions to explain to the market and the investing public that crypto lending platforms and other intermediaries must comply with time-tested securities clauses.”

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Reply from Winklevoss

On the other hand, Gemini co-founder Tyler Winklevoss responded to the SEC’s breakthrough. In a series of tweets on January 12, Tyler Winklevoss shared his frustration with the US Securities and Exchange Commission’s (SEC) accusations about Gemini’s “Earn” program, arguing that the regulator is “optimizing for political points.” He described the SEC’s action as “completely counterproductive” and said Gemini had discussed the Earn program with the regulator for “over 17 months.”

“Until Genesis paused withdrawal processes on November 16, they never raised the possibility of any enforcement action,” Winklevoss added. Gemini’s Earn was released in February 2021 and was officially active until January 8th. A settlement with Genesis, a crypto lender and subsidiary of the Digital Currency Group (DCG), allows Gemini users to profit by lending their crypto to the issuing firm.

Earlier in November, Genesis announced that roughly $175 million was stuck on the now-bankrupt FTX exchange. DCG sent $140 million to the firm to bolster its balance sheet, but Genesis suspended withdrawals on November 16, citing FTX’s bankruptcy. According to open letters from Gemini co-founder Cameron Winklevoss, Genesis owes $900 million to 340,000 Gemini Earn users. Finally, Tyler Winklevoss stated that Gemini will defend itself against allegations of unregistered securities. He added that “this will not distract them from valuable rescue work.”

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