The United States Securities and Exchange Commission (SEC) brought charges against crypto lending company Genesis Global Capital and Winklevoss-owned cryptocurrency exchange Gemini on January 12 for allegedly marketing and selling unregistered securities via Gemini’s Earn program.
According to the SEC, Genesis lent cryptocurrency belonging to Gemini customers and paid a percentage of the gains back to Gemini. Gemini then deducted an agent charge, which was often more than 4%, and distributed the remaining profit to its users.
Officials from the SEC said in a complaint that was submitted to the federal court in Manhattan that Genesis should have registered the product as a securities offering.
We 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.
SEC Chair Gary Gensler
Tyler Winklevoss claps back
Tyler Winklevoss is dissatisfied with the actions taken by the SEC. The billionaire expressed his displeasure with the SEC’s decision to take legal action today through his Twitter account, stating that it is unhelpful to Gemini and the other creditors to continue their collaborative efforts to retrieve the assets.
This move advances their efforts in no way and does nothing to assist Earn users in retrieving their lost property. Winklevoss said that the action of the government agency is entirely counterproductive.
To provide some context, the New York Department of Financial Services (NYDFS) oversaw the Earn program, and Winklevoss stated that he and his brother had been talking to the SEC about the program for over 17 months, but that the SEC never mentioned the possibility of taking enforcement action until after Genesis froze withdrawals on November 16th.
Tyler describes the SEC’s decision to publicize their case to the press before contacting them as “super lame,” despite the fact that they had been in constant communication with them.
According to him, it is sad that they are optimizing for political points rather than assisting Gemini in advancing the cause of 340,000 Earn customers and other creditors. He noted that this is a missed opportunity.
He placed a strong emphasis on the fact that they are looking forward to defending themselves against this fabricated parking ticket. In addition, the corporation will take measures to ensure that this will not divert employees’ attention from the vital recovery work that is now being carried out.
Winklevoss ended his thread with:
For the avoidance of doubt, Gemini has always worked hard to comply with all relevant laws and regulations. Any suggestion to the contrary is unsupported by the facts.
Tyler Winklevoss
