With an unlicensed programme, Genesis Global Capital and Gemini Trust allegedly raised billions from hundreds of investors. The Securities and Exchange Commission (SEC) accused Cameron and Tyler Winklevoss’ Genesis Global Capital and Gemini Trust of selling unregistered securities on Thursday. The “Gemini Earn” scheme, according to a New York Times story, offered investors significant interest on deposits, although it was never registered with the government
Gemini is run by the Winklevosses, whereas Genesis is a part of the Digital Currency Group. SEC head Gary Gensler claimed that the corporations disregarded “disclosure rules designed to protect investors” in a statement that was cited by the Times. The accusations, according to Gensler, “clearly demonstrate to the market and the investing public that crypto lending platforms and other intermediaries need to abide by our time-tested securities regulations.”
Up to 340,000 investors may have lost roughly $900 million worth of cryptocurrency, according to the SEC. The SEC’s move indicates that the cryptocurrency winter that started in 2022 has led to considerably closer examination of the cryptocurrency market.
Following a collapse in the price of cryptocurrencies like Bitcoin last spring, several cryptocurrency businesses and hedge funds like Three Arrows Capital also filed for bankruptcy. A similar event led to the bankruptcy of FTX, a significant cryptocurrency exchange run by the businessman Sam Bankman-Fried, in November. The SEC complaint described how investor funds for Gemini Earn vanished. Customers allegedly earned interest on loans made to Genesis through Gemini. Gemini would deduct a significant agent charge from the gains meant for Gemini Earn investors after being sued by investors at the end of 2022.
Additionally, according to the complaint, Genesis allegedly borrowed Digital Currency Group cryptocurrency valued at more than $500,000,000. Then, in early November, F.T.X. went under, causing Genesis to freeze customer assets. Customers of Gemini Earn were unable to receive their money back as a result. The Times reports that Gemini has filed a response saying it was only the middleman — that the transaction was actually between the clients and Genesis. The Winklevoss twins stated in an interview that they believe there is “a way to getting a deal done that’s a settlement for Earn users.”