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SEC Gemini crypto lawsuit overview:
- Who: The U.S. Securities and Exchange Commission filed a lawsuit against Genesis Global Capital LLC and Gemini Trust Co. LLC.
- Why: The SEC claims the companies worked together to promote the unregistered offer and sale and securities through the Gemini Earn program.
- Where: The lawsuit was filed in New York federal court.
Genesis Global Capital and Gemini Trust Co. violated federal securities law by allegedly engaging in an unregistered offer and sale of securities, a new lawsuit filed by the U.S. Securities and Exchange Commission (SEC) alleges.
The SEC claims the companies broke the law with an investment opportunity called the Gemini Earn program, which promised investors interest pay on crypto assets they tendered to Genesis.
The companies, meanwhile, offered and sold Gemini Earn agreements through the program without “registering the offer and sale with the SEC as required by the federal securities laws,” the SEC lawsuit alleges.
“Through this unregistered offering, Defendants raised billions of dollars’ worth of crypto assets, principally from U.S. retail investors,” the SEC lawsuit states.
The SEC argues the companies were both “integral to the operation and success of the Gemini Earn program,” with Genesis allegedly being “the issuer and entity that received, pooled, deployed, and paid interest on investors’ assets.”
The companies also worked together to market the Gemini Earn program through Gemini’s website and social media, while “touting the high interest rates that investors could earn,” the SEC lawsuit alleges.
Gemini provided retail investors access to Genesis, says SEC
Gemini also allegedly provided retail investors with access to Genesis, which the SEC argues “otherwise only engaged in crypto asset transactions with large institutional and other accredited investors.”
“Crucially, both Defendants profited from the partnership and offering,” the SEC lawsuit states.
The SEC argues that, since the program was not registered with the SEC, “investors lacked material information” about the program that “would have been relevant to their investment decisions.”
“Instead of providing investors with the full panoply of information required by the federal securities laws, Defendants have instead only made selective and inadequate disclosures,” the SEC lawsuit states.
The SEC claims the companies violated the Securities Act. The agency is demanding a jury trial and requesting the companies disgorge all of their allegedly ill-gotten gains and pay civil penalties.
A separate class action lawsuit was filed against Gemini — along with its owners, the Winklevoss twins — earlier this month by two investors arguing the company’s interest accounts were misleadingly represented.
Did you lend cryptocurrency through Gemini Earn to Genesis? Were you told that you could earn interest on the lent cryptocurrency? If so, you may be eligible to participate in a Gemini and Genesis cryptocurrency class action lawsuit investigation.
The SEC is represented in-house by Edward J. Reilly, Jonathan Austin and Ashley Sprague.
The SEC Gemini crypto lawsuit is Securities and Exchange Commission v. Genesis Global Capital LLC, et al., Case No. 1:23-cv-00287, in the U.S. District Court for the Southern District of New York.
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