SEC Continues Enforcement Campaign Against Crypto Market Participants

In an action that is reflective of the commitment of the American Securities and Exchange Commission's (the SEC) enforcement efforts against improper activity in the digital asset space, the SEC filed a complaint (the Complaint) against Genesis Global Capital, LLC (Genesis) and Gemini Trust Company, LLC (Gemini) on January 12, 2023, for allegedly engaging in the unregistered offering and sale of securities through the "Gemini Earn Program."

The step is consistent with enforcement proceedings brought by the SEC against crypto market participants generally and centralized crypto asset lenders in particular — as previously reported, in May 2022 the SEC announced that it would double the size of its Division of Enforcement's Crypto Assets and Cyber Unit. This enforcement action also confirms that the SEC views crypto lending arrangements as falling within its regulatory jurisdiction and is willing to use its traditional enforcement remedies.