Genesis Settles $21m SEC Suit Without Admitting Wrongdoing
The November 2022 crypto market contagion caused by the FTX collapse was one of the most cataclysmic events in the sector’s history. Several major industry players were felled, including Genesis, one of the more popular lending products on the market. The platform filed for bankruptcy protection in January 2023, just a week after being sued by the Securities and Exchange Commission for their favourite charge – offering investors unregistered securities. However, that legal battle has come to a close with a (expensive) whimper, with the two parties settling for USD $21M (AUD $32M).
Genesis Avoided Court Battle to Focus on Customer Repayments
According to court documents filed yesterday in New York, the settlement was reached so Genesis could avoid the significant expenses of taking on the SEC in court. Therefore, liquidators could turn their full attention to finding the assets to pay back the thousands of customers impacted by Genesis Earn’s downfall. Additionally, the hefty fine owed to the SEC will be suspended until (or unless) all of the company’s creditors are paid back.
Interestingly, Genesis still maintains its innocence. According to lawyers, the settlement was purely a means to cut costs and focus on the victims of an unfortunate crash, rather than an admission of guilt. Considering that several other SEC legal battles over unregistered securities have ended poorly for the U.S. regulatory body, it’s certainly a believable explanation.
Genesis itself is currently going through several other legal issues too. Their parent company Gemini – owned by the Winklevoss twins – is entangled in litigation with Genesis and Digital Currency Group over the platform’s collapse. New York Attorney General Letitia James is also on the offensive, with the authority attempting to ban the three aforementioned companies from operating in New York.
More news on how Genesis plans to carry out their bankruptcy proceedings is set to be heard in court on February 14.