Popular cryptocurrency lending platform, Genesis Global Capital is set to pay a $21 million civil penalty according to a court order. The Chairman of the United States Security and Exchange Commission, Gary Gensler made the disclosure on Tuesday.
As revealed, the embattled crypto lender will pay the civil penalty fine as part of a final court ruling to resolve charges connected to the Gemini Earn lending program. Recall that both Genesis and popular crypto exchange outlet, Gemini were indicted by the SEC for offering an unregulated securities product.
The Earn program garnered huge scrutiny after Genesis halted withdrawal in November 2022 as a result of a crisis that rocked the cryptocurrency landscape. Consequently, in January 2023, the SEC initiated a lawsuit against Gemini and Genesis for collaborating to launch the Earn program.
The lawsuit emanated shortly before Genesis filed for Chapter 11 bankruptcy protection. According to the SEC, the Earn program had about 340,000 customers and $900 million in assets under management when Genesis halted withdrawal. Meanwhile, the fine will finally bring an end to the legal battle between the crypto firms and the SEC.
Insight Into the Genesis and Gemini Crisis
In the official statement, Gary Gensler provided more insights into the court judgment. According to the SEC chair, the ruling in reference to numerous past efforts of the regulators is to ensure that crypto lenders comply with existing laws in the United States securities landscape.
Furthermore, Gary Gelling emphasized that the “time-tested” laws of the SEC help in promoting trust in the market and protecting investors. He stressed that abiding by the regulations of the SEC is a must and not optional because it is the law. However, the settlement materialized three weeks after Gemini decided to pay a $37 million penalty.
The fine according to a statement on February 28, 2023, by Superintendent Adrienne Harris of the New York State Department of Financial Services (NYDFS) is for numerous compliance shortcomings that threatened the smooth running of the company.
Similarly, the fine surfaced as part of an agreement reached between Gemini and the NYDFS. As part of the agreement, Gemini will fund about $1.1 billion to customers of the Gemini Earn program via the Genesis bankruptcy proceeding. Hence, the Earn investors will receive all their assets invested in the program alongside extra compensation.