US regulator SEC sues Genesis and crypto exchange Gemini

US regulator SEC is accusing crypto exchanges Gemini and Genesis of selling unregistered crypto financial securities via the Gemini Earn lending program.

“The Securities and Exchange Commission today charged Genesis Global Capital, LLC and Gemini Trust Company, LLC for the unregistered offering and sale of securities to retail investors via the Gemini Earn crypto asset lending program.

Through this unregistered offering, Genesis and Gemini raised billions of dollars in crypto assets from hundreds of thousands of investors. Investigations into other securities law violations and other entities and individuals related to the alleged misconduct are ongoing,” the SEC said in its statement.

A legal proceeding that puts a strain on these crypto companies that are already facing a tough crypto winter where many companies have gone bankrupt.

SEC Chairman Gary Gensler said:

Today’s charges build on previous actions to send a clear signal to the market and the investing public that crypto lending platforms and other intermediaries must comply with our proven securities laws. This best protects investors. It promotes confidence in the markets. It’s not optional. It’s the law.”

Following the SEC’s complaint against Gemini and Genisis, Tyler Winklevoss, co-founder of Gemini, was keen to express his surprise and displeasure on Twitter:

“It’s disappointing that the SEC chose to bring an action today when Gemini and other creditors are working hard together to recover funds. This action does nothing to further our efforts and help Earn users recover their assets. Their behavior is completely counterproductive.