The Foreign Stock Trading Federation (SEC) accused Genesis Global Capital, a digital money lender, and Gemini, a password trading center, of giving unregistered securities under Gemini's "earn" program.

In December 2020, Genesis, a subsidiary of password Group Digital currency Group (DCG), reached an agreement with Gemini to provide users of the trading platform with password products with strong returns. This is based on the release in February 2021.

According to the agreement, a Gemini customer can lend his password to Genesis, and the latter will repay the loan with interest. Genesis has good control over how he should make a profit to repay Gemini debtors.

SEC said in a statement that its civil complaint alleges that the Gemini earning plan resulted in securities offer commitments and sales, which should have been filed with SEC.

"Genesis and Gemini have been accused of giving unregistered securities to the community, bypassing disclosure rules dedicated to safeguarding investors," Gary Gensler, the current chairman of SEC, said in a statement.

Mr Gensler added that the accusation "was made on the premise of previous conduct to show the community and investors that password borrowing platforms and other intermediary services must comply with time-tested securities laws."

"this is not insignificant. This is also a national law.

On November 10, 2022, Genesis revealed that it had about $175 million worth of assets stranded on FTX because of the liquidity crisis at the password trading center. On the same day, DCG brought $140 million to Genesis in an attempt to "boost its balance sheet".

This is just the beginning. On November 16th, Genesis stopped withdrawing cash, citing "unprecedented upheaval in the sales market."

Gemini founder Cameron Winklevoss later claimed that Genesis and DCG owed Gemini customers $900 million. In an open letter from Winklevoss on January 10th, he declared that more than 340000 customers were part of the Gemini earning program, which was shut down on January 8th.

SEC says it is dealing with many individual actions by other entity lines that violate securities laws, which are related to the Gemini earning plan.

SEC's complaint was filed in the Regional people's Court of the South District of New York.