Genesis Global Holdco Settles SEC Lawsuit for $21 Million Amid Bankruptcy Proceedings

Genesis Global Holdco and its affiliates have announced a $21 million settlement with the US Securities and Exchange Commission (SEC), marking a significant milestone within its current bankruptcy proceedings. The SEC sued Genesis in civil court over the “unregistered offer and sale of securities” that was made possible by the Gemini Earn program. This case gave birth to the settlement.

The Genesis debtors seek to establish a hearing on February 14 in order to formally finalize the settlement with the SEC, as detailed in a document made on January 31 in the U.S. Bankruptcy Court for the Southern District of New York. The proposed deal resolves the SEC’s civil action claim against the business by requiring Genesis to pay $21 million to the SEC.

“The Settlement Agreement is the product of extensive negotiations between the SEC and GGC,” stated the filing. “The proposed settlement will, among other benefits to the Debtors’ estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC.”

SEC Lawsuit Origins

The SEC’s lawsuit, filed in January 2023, revolves around the actions of Genesis and Gemini between February 2021 and November 2022. The regulatory body alleges that the firms violated U.S. securities laws through their crypto lending program, specifically targeting the unregistered offer and sale of securities.

Genesis ceased withdrawals from its platform in November 2022 due to the SEC’s legal action, and in January 2023, it filed for bankruptcy. A sequence of legal manoeuvres involving Gemini, Genesis, Digital Currency Group (the parent company of Genesis), and its CEO Barry Silbert ensued from the confluence of the SEC complaint and Genesis’ bankruptcy filing.

The proposed settlement with the SEC provides clarity and may reduce the risks associated with protracted litigation, which is crucial as Genesis Global Holdco navigates these intricate legal waters. An important step toward formalizing this agreement will be taken on February 14 during the hearing.