The bankrupt crypto platform Genesis receives millions in fines after a violation

Genesis Global Capital will pay a hefty fine. The now-bankrupt crypto lending platform has agreed to a final judgment requiring it to pay $21 million in fines to the US Securities and Exchange Commission (SEC). The fine stems from violations of securities laws in the United States through the use of the defunct Gemini Earn program.

Crypto settlement

The lawsuit was filed in January 2023 and recently received a request from Genesis and crypto exchange Gemini to dismiss the case with the SEC. But the judge rejected the applications in vain. Since US authorities filed charges, Genesis and two subsidiaries have filed for bankruptcy.

Earlier this year, Genesis announced that it had agreed to the $21 million fine. Last Tuesday, the SEC officially announced that the deal was now complete. The American authority says it will only receive the fine later. First the creditors are compensated, then the fine is paid.

In total, the company lost $900 million in customer funds. At the same time, Genesis now has to pay a fine of 21 million to the SEC. A downer for creditors, who may expect less money back due to the high penalty.

Gary Gensler is wary of crypto lending platforms

SEC Chairman Gary Gensler wants to send a clear signal to investors and the crypto community. He sees crypto lending platforms as a big risk, which is not unexpected since Genesis is not the first crypto lending platform to file for bankruptcy. Crypto lending platforms Celsius and BlockFi also filed for bankruptcy in 2022. Gensler said the following in a statement from the SEC:

“Today’s agreement builds on previous actions to educate the market and investing public that crypto lending platforms and other intermediaries must comply with our proven securities laws.”

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