- Genesis shut down a few months ago after FTX collapsed
- Class action lawsuit against Gemini, about a billion dollars of customer funds is locked up in Earn
Gemini Earn offered around 8% yield for customers and they were lending the money out to hedge funds on the back end. SEC chair Gary Gensler said in a statement that the charges build on previous actions to “make it clear to the market and crypto investors that crypto products and intermediaries need to comply with time-tested securities laws.” CNBC’s Kate Rooney reports.
Genesis was one of the first lenders in the space. It shut down a few months ago as a result of what happened with FTX. They had teamed up with Gemini on the interest-bearing product. The two firms have been feuding over the Earn product for some time.
Too little, too late
It seems like the product has been going on for quite a while, and other firms were also engaging in similar lending practices involving a high-yield return. The SEC is coming in after the program has effectively been shut down. It was too little, too late in terms of customer protection.
$1B in customer funds locked
There’s now a class action lawsuit against Gemini because about a billion dollars of customer funds is locked up in Gemini Earn. The SEC’s move seems to be a warning to other crypto companies, which are already on high alert based on what has happened in the lending space.
Genesis is owned by Digital Currency Group, which is also the parent company of Grayscale Bitcoin Trust, a publicly traded investment vehicle. There’s been a lot of talk about what this means for that investment product itself.
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