The SEC has charged Gemini and Genesis with the unregistered offer and sale of ‘crypto asset securities’ through the Gemini Earn product, which halted customer withdrawals at the end of November.
The filing states that Genesis “loaned an additional $575 million worth of crypto assets, including those of Gemini Earn investors, to related party DCG, which DCG used to fund investment opportunities and repurchase DCG stock from non-employee shareholders in secondary transactions.”
The news comes after Barry Silbert, the founder and CEO of DCG, said on Twitter, “it has been challenging to have my integrity and good intentions questioned after spending a decade pouring everything into this company and the space with an unrelenting focus on doing things the right way.”
Tyler Winklevoss, the co-founder of Gemini, claims that the SEC’s lawsuit against Genesis and Gemini is counterproductive and does nothing to advance the goal of recovering Earn users’ assets.
Nexo, another large CeFi player, reportedly had its Bulgaria-based office raided by local law enforcement yesterday as part of an investigation into suspected money laundering and tax evasion.
The company has over $2.4B of customer liabilities and has minimal on-chain reserves based upon wallets known to be controlled by the company. They also hold a significant amount of value in its native token, NEXO, which feels eerily similar to the FTX/Alameda fiasco.
Exhausting times. But hey, cheers to the weekend!
-Sam Martin
