Crypto currency exchange platform Gemini is under the microscope of the Securities and Exchange Commission for what the government agency is calling a bypassing of disclosure agreements designed to protect investors, according to the Washington Post.
Gemini was founded by Cameron and Tyler Winklevoss, Olympic rowers and longtime tech entrepreneurs who famously battled Mark Zuckerberg over allegations that the Meta owner stole the idea of Facebook from the twins.
The Gemini platform, which offers high interest rates and returns on gas, electric vehicle charging, and dining, restricted users from withdrawing money in November 2022.
The SEC has charged Gemini, along with another trading company called Genesis, for offering an unregistered security program to users.
Registering is “not optional. It’s the law,” says SEC chair Gary Gensler.
“We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors,” the official said in a prepared statement.
The program in question is called Gemini Earn, which promised high-interest returns for users who let their money sit in the crypto accounts, according to the Washington Post. Earn allegedly promised a return of 8% interest.
Approximately $900 million is frozen in Genesis, which works in partnership with Gemini (and also borrows from it), and customers do not know when they will be able to get their hands on their funds. Gemini and Genesis leadership have allegedly feuded over which company is responsible for handing money back to the customers.
The SEC is attempting to clamp down on crypto companies after the fiasco involving crypto billionaire and FTX founder Sam Bankman-Fried grabbed international headlines. Similarly, users of FTX were not able to withdraw money from the platform, which resulted in the discovery that the money was gone.
The Winklevoss twins were noted as the world’s first Bitcoin billionaires in 2017, riding a “10,000 percent rise in the cryptocurrency to a 10-digit net worth.”
Cameron Winklevoss and representatives for Genesis have not replied to requests for comment.
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