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Home Blockchain

U.S. SEC is Hurting Americans When They Mix Politics With Regulation

by Kester Odero
Jan 13, 2023 - 12:00 am
in Blockchain
U.S. SEC is Hurting Americans When They Mix Politics With Regulation

On January 12, the United States Securities and Exchange Commission (SEC) accused cryptocurrency exchange Gemini and loan company Genesis Global Capital of selling unregistered securities through Gemini’s “Earn” program. According to the Securities and Exchange Commission, the accusations include Gemini’s Gemini Earn scheme for leasing cryptocurrency assets. However, not all have sat well with these accusations.

Genesis, a crypto conglomerate Digital Currency Group (DCG) division, and Gemini signed a partnership agreement in December 2020 to make the yield-bearing cryptocurrency product available to Gemini consumers. 

Customers of Gemini may lend their cryptocurrency to Genesis under the terms of the arrangement with the assurance that Genesis would reimburse the loan with interest. Genesis had complete control over the yield it would generate to pay back Gemini’s creditors.

We @SECGov charged Genesis & Gemini for the unregistered offer & sale of crypto asset securities through Gemini Earn.

Crypto intermediaries need to comply with our securities laws. This protects investors. It promotes trust in markets. It’s not optional. It’s the law.

— Gary Gensler (@GaryGensler) January 12, 2023

SEC’s accusations

According to the SEC’s lawsuit, the Gemini Earn program comprises an offer and sale of securities, which claims it should have been registered with the agency. SEC Chair Gary Gensler said, 

“We claim that Genesis and Gemini sold unregistered securities to the public, evading disclosure rules meant to safeguard investors.”

The accusations, according to Gensler, built on prior efforts to demonstrate to the market and the investing public that crypto lending platforms and other intermediaries need to abide by our time-tested securities rules.

“It’s not a choice. That is the law.” He adds.

However not all took  Gensler’s comments so kindly. Tom Emmer claims that Gary Gensler is arriving late and “covering” nobody this time. His political “regulation by enforcement” policy, in his opinion, clearly harms regular Americans.

.@GaryGensler is once again late to the game, “protecting” no one. Quite clear that his political “regulation through enforcement” strategy hurts everyday Americans. https://t.co/shJ03Zar5p

— Tom Emmer (@GOPMajorityWhip) January 13, 2023

What happened at Genesis?

On November 10, 2022, Genesis disclosed that it had cash trapped on FTX worth around $175 million when the cryptocurrency exchange was experiencing a liquidity crisis. DCG transferred Genesis $140 million on the same day to “strengthen its financial sheet.”

It was insufficient, and Genesis banned withdrawals on November 16 due to “extraordinary market turbulence.”

Since then, Genesis and DCG have been accused of owing $900 million to Gemini’s clients, according to Gemini co-founder Cameron Winklevoss. Winklevoss said in an open letter on January 10 that the Gemini Earn program, which was terminated on January 8, had more than 340,000 subscribers.

The SEC stated that it is looking into further securities law breaches involving the Gemini Earn program from other firms.

The Southern District of New York U.S. District Court received the SEC’s lawsuit.

Tags: GeminiGenesisSEC
Kester Odero

Kester Odero

Kester is focused on creating high-quality and highly optimized content. In line with this, he has specialized in emerging blockchain news technical analysis and price predictions. He has served at cryptopolitan cryptonews.net as a writer. He is dedicated to giving the best quality services and focused on delivering work during the required time.

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