On January 31, 2024, bankrupt Genesis Global Holdco, LLC, on behalf of its subsidiary Genesis Global Capital, LLC1 asked the United States Bankruptcy Court for the Southern District of New York to approve a settlement reached with the SEC to end the SEC’s enforcement action against Genesis for the unregistered offer and sale of securities through the Gemini Earn program.
Under the terms of the proposed judgment, Genesis has agreed to pay a civil penalty in the amount of $21 million, subordinated behind all administrative, priority, secured, and general unsecured claims, meaning, among other things, the SEC will be paid only if all investor claims are satisfied. The proposed judgment also includes an obey the law injunction.
According to papers filed in support of Genesis’ request for the Court’s approval, the special committee of the company’s board of directors concluded it would not be in the best interest of the debtors’ estates to continue to incur litigation costs to defend itself against claims related to the now terminated Earn program.
LEGAL TOKENS
The SEC filed its complaint against Genesis on January 12, 2023. We shared our observations on that suit here.
We here at SKrypto really don’t have anything very clever to say, except it seems like bankruptcy court may be where a lot of the SEC’s crypto enforcement actions will breathe their final breath.
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1 In addition to Genesis Global Capital, LLC, the SEC’s complaint charged Gemini Trust Company, LLC, owned and controlled by Cameron and Tyler Winklevoss, who founded it in 2014 and continue to fight the SEC’s action.