Former SEC Lawyer Says Agency Pushing to Be Crypto Regulator With Gemini/Genesis Suit

The SEC sued Gemini Trust and Genesis Capital for selling unregistered securities.

AccessTimeIconJan 13, 2023 at 6:36 p.m. UTC
Updated Jan 17, 2023 at 9:08 p.m. UTC

The U.S. Securities and Exchange Commission may be looking to cement itself as the leading regulator of the digital-asset industry with its case against crypto firms Gemini Trust and Genesis Capital, Howard Fischer, a former SEC attorney, told CoinDesk TV’s “First Mover” on Friday.

“The SEC has been trying to stake out its ground as the regulator for crypto,” Fischer said.

On Thursday, the SEC sued crypto exchange Gemini and crypto lender Genesis Global Capital for allegedly selling unregistered securities to customers of the Gemini Earn interest-bearing product.

Gemini Earn customers loaned their crypto deposits to Genesis, which then lent them out in exchange for offering Gemini customers a high yield on their deposits. In November, however, Genesis froze withdrawals, leaving an estimated 340,000 Gemini Earn customers and $900 million in crypto up in the air.

Genesis is owned by Digital Currency Group, which is also CoinDesk's parent company.

“They [the SEC] want to be the regulators,” Fischer said. “And there is a significant chance that we may see them try to expand this, if it's successful” with the lawsuit.

He added that “depending on how much money is there,” and if the “notes at issue” were unregistered securities, consumers could get their money back.

“They’re [the SEC] going to try to unwind the clock and make sure to the extent possible that customers are made whole,” Fischer said. “That is limited by the assets that are available.”


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Fran Velasquez

Fran is CoinDesk's TV writer and reporter.