On Thursday, January 12 the U.S. Securities and Exchange Commission (SEC) filed a lawsuit alleging crypto exchange Gemini and crypto lender Genesis Global Capital sold unregistered securities. In a Twitter thread Gemini CEO Tyler Winklevoss disparaged the SEC action as a “manufactured parking ticket” and did not address the potentially catastrophic implications to his firm should the SEC prevail in court.
The stakes are high for both Gemini and Genesis as the SEC complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. If the SEC argument is that the ill-gotten gains include the interest earned over the life of the alleged unregistered securities plus the outstanding principal, then perhaps these amounts alone may be enough to sink both firms – and that is before the addition of potential civil penalties.
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