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According to the SEC, Genesis, a division of Digital Currency Group, and Gemini reached an agreement in December 2020 to allow Gemini clients to lend Genesis their cryptocurrency holdings in return for interest. According to the SEC, they started to gather investor money in the form of crypto assets in February 2021.

The SEC claimed that the companies offered and sold cryptocurrency assets via its Gemini Earn product in violation of securities laws.

Genesis informed investors in December 2022 that they could not liquidate their cryptocurrency holdings due to market volatility that had caused a shortage of liquidity. Genesis had roughly 900 million dollars in assets at that time from 340,000 investors. The regulator said that the investors were unable to withdraw their funds.

The agency said that inquiries into further, similar breaches are still continuing.

A subsidiary of competing cryptocurrency company BlockFi Inc. agreed to pay the SEC and 32 states $100 million in February 2022 to resolve accusations relating to their selling of a comparable interest-bearing product.

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