SEC Files Suit Against Gemini and Genesis Over Crypto “Earn” Program

Posted on January 27th, 2023 at 1:46 PM
SEC Files Suit Against Gemini and Genesis Over Crypto “Earn” Program

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has filed suit against two crypto brokerages, Genesis Global Capital and Gemini Trust Co., for breaching federal securities laws.

The SEC’s complaint alleges that the brokerages improperly raised billions of dollars through the Gemini Earn program. While the program enabled clients to loan out their assets in exchange for interest payments, the SEC determined that the program constituted an offering of unregistered securities. Gemini created Earn in February 2021, which would permit customers to earn passive returns on their coins in exchange for the right to lend the tokens out.

The program offered rates that far exceeded those offered by traditional banks, which led to the program’s surpassing $3 billion in assets by the end of 2021. Gemini’s co-founder, Tyler Winklevoss, responded to the SEC’s allegations on Twitter by calling the complaint a “manufactured parking ticket.” Winklevoss additionally noted that Gemini had been discussing Earn with the SEC for the past 17 months, and that the SEC filed an enforcement action only when Genesis paused withdrawals from the program. Those will not be defenses, but make for an interesting showdown.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

Return to Archive

TESTIMONIALS

Previous
Next

I learned two important things working with Eccleston Law. First, I made a friend and ally with Jim and Steph for life. Secondly, and this is a crucial life lesson - if you need counsel, then seek out the very best. Jim was referred to me by a most trusted source. I've never had to hire an attorney for anything. Now, I know the value of hiring an important partner. Meticulous, thorough and detailed in preparation is the best way to describe Jim. Brilliant too, I might add. Bottom line, I would highly highly recommend Jim and Stephany for your legal needs. One of the best life decisions I've ever made.

Howard S.

LATEST NEWS AND ARTICLES

October 11, 2024
Macquarie Investment Management to Pay $79.8 Million for Overvalued CMOs and Unlawful Cross Trades

The U.S. Securities and Exchange Commission (SEC) has charged Macquarie Investment Management Business Trust (MIMBT) with overvaluing collateralized mortgage obligations (CMOs) and executing unlawful cross-trades that favored certain clients. 

October 10, 2024
Merrill Lynch and Harvest Volatility Management Fined $9.3 Million for Exceeding Client Investment Limits

According to SEC.gov, the Securities and Exchange Commission (SEC) has charged Merrill Lynch, Pierce, Fenner & Smith Inc., and Harvest Volatility Management LLC for exceeding clients’ designated investment limits, resulting in higher fees, increased market exposure, and financial losses. 

October 9, 2024
Charles Schwab Faces Lawsuit Over Failure to Prevent Elder Fraud in Computer Hack

A new lawsuit claims that Charles Schwab failed to protect an elderly client from a fraudulent scheme that drained her retirement savings.