AP

Winklevoss twins, Genesis target of SEC crypto crackdown

Jan 12, 2023, 9:12 PM | Updated: Jan 13, 2023, 11:52 am

FILE - This June 19, 2015 file photo shows the seal of the U.S. Securities and Exchange Commission ...

FILE - This June 19, 2015 file photo shows the seal of the U.S. Securities and Exchange Commission at SEC headquarters, in Washington. The Securities and Exchange Commission went after two prominent companies in the crypto community on Thursday, Jan. 12, 2023. (AP Photo/Andrew Harnik, File)

(AP Photo/Andrew Harnik, File)

NEW YORK (AP) — The Securities and Exchange Commission went after two prominent companies in the crypto community, alleging that Genesis Global Capital and the crypto exchange Gemini were selling unregistered securities through a popular program that was supposed to give high interest payments on crypto deposits.

The SEC’s lawsuit on Thursday against Gemini, which is run by Tyler and Cameron Winklevoss who are sometimes better known for being the disputed creators of Facebook, and Genesis is part of a broader cryptocurrency crackdown by multiple U.S. government agencies after crypto prices fell sharply last year, exposing mostly retail investors to billions of dollars in losses.

Tyler Winklevoss called the suit a “parking ticket” and vowed to defend the company.

The lawsuit involves a program known as Gemini Earn, which allowed individuals to deposit their cryptocurrencies in turn for a high interest rate, as much as 4.29%. Gemini and Genesis would then lend out those cryptocurrencies to other investors.

But the collapse of crypto prices last year has put many of the crypto lenders out of business, into bankruptcy, or caused them to dramatically pull back on their business. Voyager Digital, Celsius and FTX — whose founder was criminally charged last month — were all platforms that did various forms of deposit-and-lending operations.

The SEC alleges that Gemini Earn was effectively an offer and sale of securities and the program should have been registered with U.S. authorities. Further, as crypto prices collapsed, Genesis had to freeze withdrawals from its Gemini Earn program and customers are now out around $900 million, according to the SEC.

The SEC under Chairman Gary Gensler has argued for some time that they have the legal authority to regulate crypto, and they have largely used their lawsuit and enforcement powers to do so.

“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 in a statement.

The cryptocurrency industry, its lobbyists and friends in Congress have pushed back hard on the SEC, and have largely been pushing for the smaller Commodity Futures Trading Commission to oversee crypto.

Tyler Winklevoss said on Twitter that the Gemini Earn program was regulated by the New York Department of Financial Services and they had been in conversations with the SEC about Earn for more than a year-and-a-half. He said the SEC did not have issues with the Earn program until withdrawals were paused in November during the aftermath of the FTX bankruptcy.

“We look forward to defending ourselves against this manufactured parking ticket,” Winklevoss said. “And we will make sure this doesn’t distract us from the important recovery work we are doing.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

idaho gender-affirming care...

Associated Press

Supreme Court allows Idaho to enforce its ban on gender-affirming care for transgender youth

The Supreme Court is allowing Idaho to enforce its ban on gender-affirming care for transgender youth while lawsuits over the law proceed.

11 hours ago

Image: Former President Donald Trump speaks to the press in Manhattan state court in New York City ...

Associated Press

Trump’s hush money trial gets underway; 1st day ends without any jurors selected

The historic hush money trial of Donald Trump got underway Monday with the arduous process of selecting a jury to hear the case.

24 hours ago

Photo: Israeli Iron Dome air defense system launches to intercept missiles fired from Iran, in cent...

Tia Goldenberg and Josef Federman, The Associated Press

Israel is quiet on next steps against Iran — and on which partners helped shoot down missiles

On Sunday, Israel's leaders credited an international military coalition with helping thwart a direct attack from Iran.

2 days ago

Early phases of Iran's drone attack against Israel. (Photo: Getty Images)...

Associated Press

The Latest | Iran launches its first direct military attack against Israel

Iran launched its first full-scale military attack against Israel on Saturday, sending drones toward Israel.

3 days ago

Early phases of Iran's drone attack against Israel. (Photo: Getty Images)...

Associated Press

BREAKING: White House confirms Iran drone attacks towards Israel

JERUSALEM (AP) — The White House says it will provide unspecified support for Israel’s defense against an ongoing airborne attack from Iran. National Security Council spokesperson Adrienne Watson said in a Saturday statement that “Iran has begun an airborne attack against Israel.” She added: “The United States will stand with the people of Israel and […]

3 days ago

Image: O.J. Simpson attends his parole hearing at Lovelock Correctional Center July 20, 2017 in Lov...

Associated Press

O.J. Simpson, fallen football hero acquitted of murder in ‘trial of the century,’ dies at 76

O.J. Simpson, the former NFL star and Hollywood actor who was acquitted of charges he killed his ex-wife and her friend has died at 76.

5 days ago

Winklevoss twins, Genesis target of SEC crypto crackdown