Gemini Earn and Genesis Capital Defraud 340,000 Customers of $1.1 Billion; SEC Charges Filed
Incident Details
Summary
In November 2022, Genesis Capital — a crypto lending arm of Digital Currency Group — froze withdrawals following losses in the FTX and Three Arrows Capital collapses, locking $1.1 billion in assets belonging to 340,000 customers of Gemini's 'Earn' program. The SEC filed charges against both Gemini and Genesis in January 2023, alleging they had sold unregistered securities through the Earn program. Genesis filed for bankruptcy in January 2023. A prolonged public dispute between Gemini's Winklevoss twins and DCG's Barry Silbert played out on social media. In August 2023, Genesis agreed to settle with customers; a settlement plan was confirmed in late 2023 returning a significant portion of customer funds. The case illustrated systemic risks of crypto yield products sold to retail investors.
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