Crypto lender Genesis Global has settled with the U.S. Securities and Exchange Commission (SEC) in a lawsuit related to its bankrupt Gemini Earn lending program.
As part of the deal, Genesis has agreed to pay a $21 million civil penalty, contingent upon the full repayment of customers during its ongoing bankruptcy proceedings.
Genesis Agrees to $21 Million Settlement
The agreement, filed in U.S. Bankruptcy Court in Manhattan on Wednesday evening, allows Genesis to evade the expenses and uncertainties associated with defending itself against the SEC’s allegations of illegally selling securities.
While Genesis did not admit or deny wrongdoing in the settlement, the resolution will enable the company to focus on repaying customers and other creditors during its bankruptcy proceedings. The deal stipulates that the $21 million fine will only be enforced if Genesis successfully fulfills its financial obligations to creditors.
To expedite the resolution and streamline the bankruptcy process, Genesis is pushing forward with a liquidation plan that aims to repay customers in cash or cryptocurrency, depending on the types of currency deposited in the Earn program. The company will seek court approval of its bankruptcy plan on February 14.
The settlement agreement is pending approval by a bankruptcy judge and, if successful, will mark a significant step in resolving the legal challenges surrounding the Gemini Earn program.
Genesis Faces Potential Industry Ban
The SEC lawsuit against Genesis was initiated just before Genesis sought bankruptcy protection in January 2023. The legal dispute revolved around Genesis and Gemini Trust, jointly overseeing the Gemini Earn program.
Launched in December 2020, the program allowed Gemini customers to lend their crypto assets to Genesis, earning interest and amassing billions in crypto assets from investors.
Allegations from the SEC accused both companies of illegally selling securities to hundreds of thousands of investors through the program. The collaboration stopped during a crypto market downturn in November 2023, leading to legal proceedings between Genesis, Gemini, and Genesis’s parent company, Digital Currency Group (DCG).
Meanwhile, Genesis, Gemini, and DCG are facing a parallel enforcement action initiated by New York Attorney General Letitia James. The Attorney General seeks to ban these companies from the financial investment industry in New York while obtaining restitution for affected investors and securing the disgorgement of ill-gotten gains.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
Credit: Source link
