The infection of the cryptocurrency ecosystem has been confirmed. After FTX, Genesis, and Gemini, two cryptocurrency brokerages and lenders have been sued. The US securities regulator, the Securities Commission, sued the two companies on Thursday for offering to provide loans Digital currencies without registering with the competent authorities. The foundation claims that Genesis then kept about $900 million Digital currencies Borrowed from about 340,000 customers. However, the two companies, through this offer, It raised billions of dollars in assets Digital currencies With hundreds of thousands of investors the SEC says in a press release.
The agency, which is currently seeking to prove that it regulates the sector well after the uproar over the failure of FTX and Alameda Research on November 11, 2022, says other charges related to this case could be announced at a later date.
Crypto financial services company, weakened by FTX bankruptcy.
Genesis, a subsidiary of Digital Currency Group, presents itself as a brokerage platform for Digital currencies Designed for professional investors. Founded by the Winklevoss Brothers, and best known for the movie ” social network At the genesis of Facebook, Gemini offers the public several financial products related to Digital currencies. According to the SEC complaint, the two companies entered into an agreement at the end of 2020 in which Genesis will offer Gemini customers the possibility to lend them. Digital currencies In exchange for interest, in a program called Gemini Earn. Gemini took commissions on the road while Genesis used a Digital currencies at its discretion.
The problem is, part of the clients’ funds deposited with Genesis has been redeposited into FTX. So when Sam Bankman-Fried’s cryptocurrency exchange froze withdrawals and then went bankrupt within days, 30% of Genesis funds were tied to it. The result, Genesis, which does not have the ability to refund all of its customers at the moment, has frozen withdrawals for its own and Gemini customers for two months. Genesis is now trying to find solutions to recoup the 30% of customers’ money blocked and specifically wants to raise money for it, without success according to Bloomberg.
Problem number two, Genesis is in conflict with Digital Currency Group, another crypto-asset firm that has been accused of blaming it before Cameron Winklevoss for borrowing money from Genesis without paying it back, which would prevent repayment to other customers. ” It is now clear that you implemented the prevention methods in bad faith The businessman denounced it in a scathing open letter posted on Twitter on January 2. ” If you imagine that you can hide silently in your ivory tower and everything will magically work out, or that it’s someone else’s problem, you’re swimming in fantasy. He adds. In response, Barry Silbert, CEO of Digital Currency Group confirmed that “ DCG did not borrow $1.675 billion from Genesis. DCG has never missed an interest payment for Genesis and is applicable to all outstanding loans “.
In the face of Genesis’ liquidity crunch, the company had to lay off 60 employees, or 30% of its workforce, at the beginning of January. ” As we continue to confront unprecedented industry challenges, Genesis has made the difficult decision to downsize its global workforce a company spokesperson explained in an email. The company had already cut its workforce by 20% in August.
The Saudi Electricity Company accuses Genesis of illegal fundraising
In its complaint, the SEC held that Gemini Earn was in fact engaged in fundraising in the markets and supposed to be on its services. Such a process is supposed to protect investors by making too much information public.
With these new fees, the SEC wants to Clarification to the market and to investors that credit lending platforms Digital currencies Other brokers must comply with our well-tested securities laws its chairman, Gary Gensler, commented in a press release. The two companies did not immediately respond to AFP’s requests.
(with AFP)
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