Bankrupt cryptocurrency lender Genesis has opted to settle a lawsuit with the United States Securities and Exchange Commission (SEC), agreeing to a settlement of millions of dollars.
The resolution specifically deals with allegations that Genesis violated securities laws through its Gemini Earn program, which was conducted in partnership with Gemini.
Genesis Settles with US SEC
According to a recent court filing, Genesis is required to pay the United States Securities and Exchange Commission (SEC) $21 million in order to fufill the settlement agreement.
“In summary, the Settlement Agreement provides that the SEC shall receive an allowed general unsecured claim against GGC in the amount of $21 million (the “Allowed SEC Claim” or the “Allowed Claim”) in full and complete satisfaction of the Civil Action Claim asserted against GGC.”
In December 2023, BeInCrypto reported that users of the Gemini Earn platform were eagerly waiting their funds to be returned.
However, it was noted that they could be in for a big disappointment.
A restructuring plan detailed what customers might be entitled to, however, it could be a lot less than they put in.
It was reported that Gemini Earn users were set to see just 61% of the value of their crypto from January 19, 2023. This is the date that Gemini filed for bankruptcy.
However, the United States Department of Justice filed an objection to Genesis’ Chapter 11 plan this week.
Read more: 11 Best Altcoin Exchanges for Crypto Trading in January 2024
Long-standing Genesis Controversy Continues
Meanwhile, there was controversy last year over whether Gemini withdraw significant amount of funds before Genesis collapsed.
Two individuals reportedly provided the information. They stated that Gemini withdrew $282 million from the Genesis several months before the entity declared insolvency.
This allegedly occurred just five months before the filing for bankruptcy by Genesis’ lending arm on January 20th.
Read more: Gemini vs. Coinbase: Everything You Need To Know
The sources claim that Gemini used the withdrawn funds from Genesis to establish a reserve. This was to allegedly ensure sufficient liquidity for Gemini Earn customers to facilitate “immediate redemptions.”
However, Gemini strongly refuted the allegations:
“The Gemini Earn Program Terms permitted Gemini to establish a “liquidity reserve” for the benefit of Earn users by holding back a portion of the money they deposited into the Earn program. Amidst the broad market turmoil in the summer of 2022, we decided to increase the liquidity reserve.”
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