In a lawsuit filed late Thursday, The U.S. Securities and Exchange Commission (SEC) has fired back at crypto exchange Gemini and crypto lender Genesis Global for allegedly selling unregistered securities.
The SEC’s attack comes in between a public spat between Gemini and Genesis over Gemini Earn. Earn is the flagship yield-bearing product of Gemini exchange and is now short $900 million, leaving over 340,000 customers in limbo. Gemini alleges Genesis loaned the sum out to bad actors for a promised yield, and is now refusing to return the funds to Gemini Earn’s customers. It is noted that Genesis closed out lending withdrawals in November.
Beyond the accusation that the firms sell unregistered securities, the SEC has accused the Gemini Earn product of being an unregistered security itself. With representatives from the Commission saying that “defendants offered and sold the Gemini Earn Agreements through the Gemini Earn Program without registering” and that “investors lacked material information about the Gemini Earn program that would have been relevant to their investment decisions.”
The SEC’s interjection is the latest in a public battle between Gemini and Genesis, with each side calling each other liars and “hungry for publicity.” The Gemini exchange was also in the news a few days earlier for laying off 30% more of their staff after the downfall of 3AC and Luna.