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According to a recent update, Genesis, a once-prominent cryptocurrency company that faced significant turmoil, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) regarding its Earn product. This agreement aims to resolve allegations that Genesis illegally raised funds from investors through its Earn program, and represents a crucial step towards securing the company’s future and protecting customer rights.
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Defunct Crypto Company Settles With SEC
Genesis operates as a subsidiary of Digital Currency Group. As a result of the agreement with the SEC, the company has agreed to pay a $21 million penalty. However, this payment is contingent on Genesis being able to make full repayments to customers and other creditors under Chapter 11.
According to documents filed with a New York bankruptcy court on Wednesday, Genesis requires approval from a bankruptcy judge to pay this fine. The settlement also resolves allegations that Genesis illegally raised funds from investors through the Gemini Earn program, which it operated in partnership with Gemini.
The Gemini Earn program allowed customers to lend their digital assets and earn interest payments. However, the SEC claimed that this constituted an unregistered securities offering. Genesis’ court documents state that the settlement with the SEC will save the company money and prevent further lawsuits.
The company stated that continuing to defend the lawsuit would be a significant distraction for Genesis and its advisors, who are working to return as much cash as possible to creditors and obtain court approval for a debt repayment plan.
This settlement between Genesis and the SEC underscores the importance of regulatory compliance in the cryptocurrency world. Such agreements can contribute to increased transparency in the industry and protect investors. However, they also highlight the necessity for companies to adhere to regulations and fulfill their responsibilities.