The Securities and Exchange Commission (SEC) has announced a final judgment requiring Genesis Global Capital, LLC to pay a civil penalty of $21 million and imposing a permanent injunction to settle charges related to its unregistered offer and sale of securities through the Gemini Earn program.

According to SEC.gov, Genesis Global Capital, LLC faced allegations of failing to register its retail crypto lending product before offering it to the public, thus circumventing vital disclosure requirements intended to safeguard investors. SEC Chair Gary Gensler emphasized the importance of compliance with securities laws, stressing that such measures are essential for investor protection and market trust.

The enforcement action stemmed from Genesis' involvement in the Gemini Earn program, an investment opportunity where Gemini customers, including retail investors, loaned their crypto assets to Genesis in exchange for promised interest payments. However, in November 2022, Genesis announced its inability to facilitate withdrawals due to insufficient liquid assets, leaving approximately 340,000 investors unable to access their $900 million in crypto assets.

Genesis and two affiliates filed for Chapter 11 bankruptcy in January 2023, further exacerbating the situation for investors who have been unable to retrieve their invested crypto assets. The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charged Genesis with violating Sections 5(a) and 5(c) of the Securities Act of 1933.

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