Genesis Settles $21M SEC Lawsuit After Bankruptcy

Genesis, the bankrupt lender, has reached a settlement with the Securities and Exchange Commission regarding the Earn lawsuit filed by the SEC last year.

Crypto lender Genesis Global has settled with the U.S. Securities and Exchange Commission (SEC) regarding its defunct Gemini Earn lending program.

The agreement entails a $21 million fine, payable only if Genesis successfully repays customers in its bankruptcy proceedings.

Agreement Details

Under the settlement, Genesis Global will avoid the costs and uncertainties of defending itself in the SEC lawsuit. The agreement, filed in the U.S. Bankruptcy Court in Manhattan, allows Genesis to prioritize the repayment of customers and other creditors.

The settlement does not require Genesis to admit or deny any wrongdoing related to the SEC's allegations.

Background and Legal Proceedings

The SEC filed a lawsuit against Genesis the week before the company filed for bankruptcy protection in January 2023. The lawsuit alleged that Genesis, in collaboration with cryptocurrency exchange Gemini Trust, unlawfully sold securities to hundreds of thousands of investors through their Gemini Earn lending program.

The Gemini Earn program, launched in December 2020, allowed Gemini customers to lend their crypto assets to Genesis in exchange for earning interest. However, the program was discontinued during a crypto market crash in November 2023, leading to litigation among Genesis, Gemini, and Genesis's parent company, Digital Currency Group (DCG).

According to Axios, in addition to the SEC lawsuit, the companies are also facing enforcement action from New York Attorney General Letitia James. James seeks to prevent all three cryptocurrency firms from participating in the financial investment industry in New York.

Bankruptcy Proceedings and Repayment Plan

Genesis is progressing with a liquidation plan to repay customers in cash or cryptocurrency, depending on the types of assets they deposited in the Gemini Earn program.

According to Decrypt, the company intends to seek court approval for its bankruptcy plan on February 14 as it works towards fulfilling its obligations to customers and creditors.

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