Genesis Global Holdco and its affiliated companies have reached a settlement with the United States Securities and Exchange Commission (SEC) amounting to $21 million. The resolution comes in the wake of legal troubles, including a bankruptcy filing by Genesis, and centers around the SEC’s allegations related to the “unregistered offer and sale of securities” through the Gemini Earn program.
Proposed Recognition in Bankruptcy Case
In a filing on January 31 in the U.S. Bankruptcy Court for the Southern District of New York, Genesis debtors have proposed a hearing on February 14 to seek approval for the SEC settlement as part of their bankruptcy case. The proposed agreement entails Genesis paying $21 million to the SEC, putting an end to the civil lawsuit regarding actions taken during the crypto lending program’s operations.
The filing highlighted that the settlement was a result of extensive negotiations between the SEC and Genesis Global Holdco. The proposed resolution is expected to bring various benefits to the Debtors’ estates, including the resolution of the SEC’s Civil Action Claim filed during the Chapter 11 Cases. It aims to eliminate the potential risks, expenses, and uncertainties associated with prolonged litigation against the SEC.
Genesis and Gemini’s SEC Lawsuit
The settlement arises from an SEC lawsuit filed in January 2023 against Genesis and Gemini, focusing on alleged violations of U.S. securities laws through the crypto lending program. The SEC accused both entities of misconduct between February 2021 and November 2022, leading to the suspension of withdrawals on Genesis’ platform and the subsequent bankruptcy filing in January 2023.
The SEC’s lawsuit against Genesis and Gemini triggered a series of legal actions involving Genesis, Gemini, Genesis’ parent company Digital Currency Group, and its CEO Barry Silbert. This development underscores the ongoing regulatory scrutiny within the cryptocurrency industry, with notable settlements and legal actions involving firms like Ripple, Binance, Coinbase, and Kraken.
Genesis Global Holdco’s $21 million settlement with the SEC represents a significant step towards resolving legal challenges amid bankruptcy proceedings. The agreement, subject to court approval, aims to bring closure to the SEC’s allegations surrounding the Gemini Earn program. As regulatory oversight continues to shape the cryptocurrency landscape, such settlements highlight the importance of compliance and adherence to securities laws for industry participants.