gavel on a laptop

The U.S. Securities and Exchange Commission (SEC) charged a pair of crypto firms — Genesis Global Capital LLC and Gemini Trust Company LLC — for allegedly violating securities laws with a crypto lending program that raised billions from investors.

The regulator’s complaint alleged that the firms’ crypto asset lending program, which was launched in early 2021, offering investors the opportunity to receive interest by loaning their crypto to Genesis — amounted to an unregistered securities offering.

The allegations have not been proven.

The program was suspended last November amid turmoil in the crypto market after the collapse of FTX.

“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” SEC chair Gary Gensler said in a release.

“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. Doing so best protects investors,” he added. “It’s the law.”

The SEC’s investigation into other possible violations and additional charges is ongoing.

The initial complaint seeks permanent injunctive relief, disgorgement and civil penalties.

On Twitter, Gemini co-founder Tyler Winklevoss criticized the regulator’s action, saying that the company had been in discussions with the SEC about the lending program for more than 17 months.

“Despite these ongoing conversations, the SEC chose to announce their lawsuit to the press before notifying us,” Winklevoss tweeted, adding Gemini and other creditors “are working hard together” to recover funds.

“Our investigations in this space are very much active and ongoing and we encourage anyone with information about this matter or other possible securities law violations to come forward, including under our whistleblower program if applicable,” said Gurbir Grewal, director of the SEC’s enforcement division, in a release.