On January 12, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the digital asset management group Genesis and the crypto exchange Gemini, which was founded by the Winklevoss twins. However–what comes as a surprise–the former SEC Enforcement Chief Lisa Braganza claims that the financial watchdog was well aware of the product “yet it allowed to continue”.
SEC Knew Since 2022
In a televised interview on CNBC’s Squawk Box episode, Lisa Braganza, a former branch chief in the Chicago SEC’s enforcement division spoke about the SEC’s new allegations against Genesis & Gemini and also regarding the circumstances surrounding the case. According to Lisa, the securities-monitoring body of the United States had been investigating Gemini’s crypto-lending product for a considerable amount of time but still allowed the potentially fraudulent operation to continue.
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She went on to explain that the SEC’s inaction during talks with Gemini continued even after the crypto market crashed in November of 2022 and Gemini stopped paying its customers. Moreover, she stresses on the fact that “two more months went by” before any action was taken because Gemini had filed an answer in a separate case, which was a class action against Gemini for failing to continue payments under their proprietary Earn product.
The former branch chief was quoted as saying:
The SEC has been clear for years that something like this Earn program is a security, so it’s puzzling why they didn’t come to a resolution of this a long time ago, months and months ago.
The Genesis-Gemini Saga
Braganza is of the opinion that there was a lot of blame game going around, beginning with Barry Silbert, the CEO of Genesis’s parent company Digital Currency Group (DCG) but also including the Winklevoss twins; who relied on Silbert’s confidence in Genesis’s solvency without doing their own prior research. What further baffles the SEC Chief is that, since around June 2022, Genesis had essentially been doing its business in a manner that was not compliant or solvent.
Furthermore, she claims that these crypto businesses owed it to their customers, particularly when they were dealing with large sums of money — especially their consumer’s money.
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