Market Analysis Report (13 Jan 2023)

The U.S. Securities and Exchange Commission (SEC) has sued digital currency trading platform Gemini and cryptocurrency lender Genesis, stating that Gemini’s cryptocurrency lending program Earn wasn’t properly registered as a securities offering.

The program, as of October 2022, offered net interest rates to investors as high as 8.05%, according to the SEC. In February 2021, Gemini started allowing users to loan their digital assets to Genesis in exchange for interest.

The SEC said that Gemini facilitated the transaction, taking agent fees as high as 4.29% that totaled roughly $2.7 million in the three months to March 2022. In November, Genesis halted withdrawals over insufficient liquidity, affecting 340,000 Gemini Earn investors with about $900 million lent out.

Gemini shut down its Earn offering earlier this month, but retail investors are still unable to withdraw their funds. The SEC said they “have suffered significant harm,” with SEC Chair Gary Gensler saying in a statement:

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.”

Gensler said doing so “best protects investors and “promotes trust in markets.” Gemini co-founder Tyler Winklevoss called the SEC’s move “counterproductive,” noting that it does “nothing to further our efforts and help Earn users get their assets back.

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/jan/13/