SEC accuses Genesis and Gemini of selling unregistered securities.
By The Exchange Team
On Thursday, the SEC charged Genesis and Gemini with offering unregistered securities for a high-yield deposit programme.
In Feb 2021, Gemini, a crypto exchange, and Genesis, a crypto lender, launched Earn, a program that promised upto 8% returns.
Genesis leased Gemini users' crypto and gave a percentage of the profits to Gemini, which withheld an agency charge, sometimes over 4%, as per the SEC.
And gave users the remaining profit. In a Manhattan federal court case, the SEC said Genesis should have filed the product as a security.
SEC officials said Gemini's Earn program, financed by Genesis' loan, fit the requirements by including an investment contract and a note.
These two characteristics are used by the SEC to determine whether an offering is a security.
According to the SEC, the Earn program netted the corporations billions of dollars in cryptocurrency assets.