Lending Nexo reaches $44.5M settlement with SEC, others Nexo reaches $44.5M settlement with SEC, others Mike Dalton · 11 hours ago · 2 min read The charges concern Nexo’s EIP, which is no longer offered in the U.S.2 min read Updated: January 20, 2023 at 1:19 am Cover art/illustration via CryptoSlate Crypto lending company Nexo has settled with the U.S.Securities and Exchange Commission (SEC), according to a press release on Jan.19.The SEC charged Nexo with failing to register its retail lending product — the Earn Interest Product (EIP) — which it first began to offer in the U.S.
in June 2020.Nexo allegedly advertised the EIP as a way for cryptocurrency investors to earn interest on their crypto deposits, then invest the funds it received at its discretion.Nexo was required to register this activity with the SEC but did not do so.
The company agreed to settle by paying the SEC a $22.5 million penalty.Nexo will also pay another $22.5 million to settle with state regulators, including New York, Texas, Washington, and Alaska.This brings its total penalty to $44.5 million.Nexo will also be required to stop offering the EIP to investors in the United States.The SEC said it has taken into account that Nexo is already cooperating toward this end: Nexo stated in December 2022 that it would leave the U.S.due to regulatory uncertainty, and it specifically stopped offering the EIP to U.S.investors last February.Nexo has made positive comments on the settlement.
The company called the outcome a “final landmark resolution.” It emphasized that the allegations only concerned its EIP product and did not allege fraudulent or misleading practices.The company also noted that the settlement closes multi-year inquiries into Nexo and said that it is neither required to admit nor deny the charges.The SEC has taken action against other crypto companies offering similar lending products.The regulator settled with the now-bankrupt BlockFi in February 2022 for $100 million.Incidentally, Nexo took note of the charges against its competitor and immediately stopped offering its EIP to U.S.-based customers, as noted above.
The SEC also charged Gemini and Genesis over their insolvent cryptocurrency lending product, Gemini Earn, earlier this month.Elsewhere, Coinbase shut down its Lend program in 2021 following the ultimately unfulfilled threat of SEC action.Despite its high-profile collapse last summer, the SEC did not take action against Celsius, though early reports suggested it probed the firm over its account suspensions.
Bankruptcy Genesis owes over $3.5B to top 50 creditors, owes $765.9M to Gemini Earn users Genesis owes over $3.5B to top 50 creditors, owes $765.9M to Gemini Earn users Monika Ghosh · 3 hours ago · 1 min read Genesis’ bankruptcy filing shows a much lower debt liability to Gemini Earn users than the $900M debt Cameron Winklevoss had claimed.
1 min read Updated: January 20, 2023 at 8:09 am Cover art/illustration via CryptoSlate Genesis owes more than $3.5 billion to its top 50 creditors, according to its Chapter 11 bankruptcy filing.The filing shows that its biggest debt is $765.9 million to Gemini Earn users.However, earlier in January, Gemini co-founder Cameron Winklevoss had pegged Genesis’ total debt to over 340,000 Gemini Earn users at $900 million.Genesis files for Chapter 11 Genesis filed for bankruptcy on Jan.19 after struggling with liquidity issues since the collapse of FTX in November 2022.
The names of more than half of the top 50 creditors were withheld in the bankruptcy filing.The top 3 creditors whose names were kept confidential are owed a total of over $1 billion.Crypto fund Mirana Corp — which had reportedly sued Three Arrows Capital (3AC) over a loan agreement after it filed for bankruptcy — is the fifth largest creditor of Genesis.Genesis owes $151.5 million to Mirana.Other notable names in the Genesis creditors list include Moonalpha Financial Services — which conducts business as Babel Finance — crypto savings firm Donut, and VanEck New Finance Income Fund.Genesis owes over $150 million, $78 million, and $53.1 million to Babel, Donut, and VanEck, respectively.
Genesis also owes $18.72 million to trading firm Cumberland DRW, and $20 million to gaming firm Big Time Studios, which was founded by Decentraland co-founder Ari Meilich.SEC charges Gemini, Genesis over Earn program; Winklevoss responds Mike Dalton · 5 hours ago · 2 min read The now-defunct service allegedly constituted an unregistered securities offering.2 min read Updated: January 12, 2023 at 11:54 pm Cover art/illustration via CryptoSlate The U.S.Securities and Exchange Commission has charged Genesis and Gemini over their now-defunct Gemini Earn program, according to a Jan.
12 announcement.SEC chair Gary Gensler said: We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors.Today’s charges build on previous actions to make clear … that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.The SEC said that the Earn program constituted both an unregistered offer and sale of securities.
The regulator further alleged that Genesis and Gemini brought in billions of dollars worth of cryptocurrency from hundreds of thousands of users.Genesis and Gemini entered an agreement in December 2020 that led to the launch of Gemini Earn in February 2021.The service allowed Gemini users, through a tri-party agreement, to lend assets to Genesis in exchange for interest on those deposits.Genesis then forced a halt on Earn withdrawals in November 2022, citing a lack of liquidity resulting from market conditions at the time of FTX’s collapse.
The SEC said that Genesis Earn held $900 million worth of crypto assets belonging to 340,000 Gemini Earn users at the time that withdrawals were paused.That issue has attracted plenty of controversy in recent months, and it made up part of the SEC’s complaint today.
However, the SEC additionally drew attention to questionable practices carried out by Gemini while the service was operational.The regulator said that Gemini collected an agent fee as high as 4.29%.
It also alleged that Gemini pooled investors’ Earn funds with other funds and invested those funds at its discretion, as the Earn agreement did not clearly set state how investor assets could be used.The SEC’s filed complaint also suggests that the Gemini Earn agreements were not registered with the SEC as required by federal securities laws.
It additionally alleges that Gemini and Genesis made “selective and inadequate disclosures” and says that the two firms promoted Gemini Earn to the public as an investment.The SEC seeks to enjoin the two companies from further violating specific securities regulations.
It also aims to have the two companies disgorge or surrender their ill-gotten gains and pay interest and penalties on those gains.Today’s filing does not indicate exactly how much Genesis and Gemini might owe to the SEC.Nor does it indicate precisely which services — if any — the two firms might be prevented from offering.Earn users have now been unable to withdraw their funds for two months, and the program was officially and permanently suspended on Tuesday.
It is unclear whether the SEC’s actions will help users regain the funds in their accounts.Tyler Winklevoss responds Tyler Winklevoss responded on Twitter, saying the behavior of the SEC is seen as counterproductive, and they never raised the prospect of any enforcement action until after withdrawals were paused.He also mentioned “Despite these ongoing conversations, the SEC chose to announce their lawsuit to the press before notifying us.Super lame.
It’s unfortunate that they’re optimizing for political points instead of helping us advance the cause of 340,000 Earn users and other creditors.” Read Our Latest Market Report Bear Market DCG scrambling to raise funds to cover Genesis’ $3B debt burden DCG scrambling to raise funds to cover Genesis’ $3B debt burden Monika Ghosh · 32 mins ago · 2 min read DCG is trying to liquidate its venture capital holdings worth $500 million, which is less than 17% of Genesis’ outstanding debt.2 min read Updated: January 12, 2023 at 3:50 pm Cover art/illustration via CryptoSlate Embattled crypto lender Genesis owes over $3 billion to its creditors, the Financial Times reported on Jan.12, citing sources familiar with the matter.The lender owes $900 million to users of Gemini’s Earn program, over $303 million to Dutch exchange Bitvavo, as well as money to users of crypto savings firm Donut.
On Jan.10, Bitvavo rejected DCG’s proposal to repay 70% of its debt Genesis is in talks with investment bank Moelis to explore its options but external funding attempts have failed so far.
Genesis’ parent company Digital Currency Group (DCG) is seeking to unload its venture capital portfolio to raise funds, according to the FT report.DCG, which also controls crypto media outlet Coindesk and investment manager Grayscale, has invested in around 200 crypto projects across more than 30 countries.The most popular investments, according to the DCG website, include exchanges Coinbase and Kraken, crypto investigation platform Chainalysis, Decentraland, USD Coin (USDC) issuer Circle, and Dapper Labs, the firm behind NBA Top Shots and CryptoKitties non-fungible token (NFT) collections.DCG also invested $250,000 in the now-defunct crypto exchange FTX in July 2021.Anonymous sources told FT that DCG’s venture investments are illiquid since investors tightened funding amid a global economic downturn.Moreover, the collapse of FTX has also made investors wary of funding crypto projects.This means that DCG’s portfolio could take some time to sell.
Even if DCG successfully sells its venture capital holdings, it would not be enough to cover Genesis’ outstanding debts.FT sources pegged the value of DCG’s portfolio at around $500 million, which is less than 17% of Genesis’ debt burden.Genesis halted withdrawals in November on the heels of the FTX implosion, citing “unprecedented market turmoil.” The Winklevoss twins, founders of Gemini, have been engaged in a public feud with DCG CEO Barry Silbert over Genesis’ debt.
The Winklevii called for the removal of Silbert earlier this week, stating that he was “unfit” to run the conglomerate.DCG is currently being investigated by the U.S.Department of Justice as well as the Securities and Exchange Commission over internal money transfers to Genesis.Read Our Latest Market Report Top posts Altcoins1 hour ago Wrapped Bitcoin Project Sees 18% Redemption Of Circulating Supply In 54 Days Statistics show over the course of 54 days, the number of wrapped bitcoin (WBTC) hosted on the Ethereum network has…
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