SEC v. Genesis Global Capital, LLC; and Gemini Trust Company, LLC, No. 1:23-cv-00287, Southern District of New York (Jan. 1, 2023) — Complaint

UNITED STATES DISTRICT COURT
 SOUTHERN DISTRICT OF NEW YORK

23-cv-287

ECF Case

Complaint
Jury Trial Demanded

Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”) files this
Complaint against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC
(“Gemini”) (collectively, “Defendants”) and alleges as follows:
SUMMARY
1. Between February 2021 and November 2022, Genesis and Gemini engaged in an
unregistered offer and sale of securities to U.S. retail investors, in violation of the federal
securities laws. Through an investment opportunity that Defendants called the “Gemini Earn”
program, investors tendered crypto assets to Genesis and, in exchange, Genesis promised to pay
interest on those assets to investors. Through this unregistered offering, Defendants raised
billions of dollars
’ worth of crypto assets, principally from U.S. retail investors.
2. Both Defendants were integral to the operation and success of the Gemini Earn
program. Genesis was the issuer and entity that received, pooled, deployed, and paid interest on
investors’ assets. Genesis and Gemini marketed the Gemini Earn program through social media
and Gemini’s website, touting the high interest rates that investors could earn through Gemini
Earn. And Gemini provided retail investors with access to Genesis, which otherwise only

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

v.

GENESIS GLOBAL CAPITAL, LLC and
GEMINI TRUST COMPANY, LLC,

Defendants.

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engaged in crypto asset transactions with large institutional and other accredited investors.
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Crucially, both Defendants profited from the partnership and offering.
3. To participate in the Gemini Earn program, Genesis and Gemini required that
investors enter into a tri-party Master Digital Asset Loan Agreement with Genesis and Gemini
(“Gemini Earn Agreement”), whereby Gemini Earn investors provided crypto assets to Genesis,
with Gemini acting as the agent in the issuance. Genesis would send interest payments to
Gemini, which would then deduct an “Agent Fee” before distributing the remainder of the
interest payments to Gemini Earn investors.
4. Genesis pooled the crypto assets from Gemini Earn investors with assets from
other investors. Genesis then deployed the crypto assets – primarily by lending the crypto assets
to institutional counterparties (“Institutional Borrowers”) – in order to generate revenue for its
business, including the revenue necessary to pay interest to Gemini Earn investors. Genesis
earned revenue by lending the crypto assets at a higher rate than it paid to Gemini Earn and other
investors.
5. The Genesis Earn Agreements, as offered and sold through the Gemini Earn
program, were securities that Genesis and Gemini offered and sold to the investing public.
6. Defendants offered and sold the Gemini Earn Agreements through the Gemini
Earn Program without registering the offer and sale with the SEC as required by the federal
securities laws. As a result, investors lacked material information about the Gemini Earn
program that would have been relevant to their investment decisions. Instead of providing
investors with the full panoply of information required by the federal securities laws, Defendants

1
 “ Accredited investors” are those persons whose financial sophistication and ability to sustain the risk of
loss of investment or fend for themselves render the protections of the Securities Act of 1933’s
registration process unnecessary. See Rule 501(a) of the Securities Act of 1933 [17 C.F.R. § 230.501].

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have instead only made selective and inadequate disclosures.
7. The U.S. retail investors who participated in the Gemini Earn program have
suffered significant harm. In November 2022, Genesis unilaterally announced that it would not
allow hundreds of thousands of retail investors to withdraw their crypto assets from Gemini Earn
because of “withdrawal requests which have exceeded our current liquidity” following volatility
in the crypto asset market. At the time, Genesis held approximately $900 million in investor
assets from approximately 340,000 Gemini Earn investors, most residing in the United States. As
of the date of this Complaint, these retail investors still cannot withdraw their assets, and Genesis
has formed a special committee to oversee a restructuring process.
8. While the Gemini Earn program has been terminated, both Genesis and Gemini
continue to do business in the crypto asset industry. In particular, Genesis intends to reengage in
crypto asset lending activities. Gemini continues to hold billions of dollars’ worth of crypto
assets on behalf of retail investors in connection with its trading platform and other activity in
this industry. Thus, Defendants remain positioned to violate the registration provisions if they are
not enjoined from doing so.
VIOLATIONS
9. By engaging in the conduct described in this Complaint, Defendants violated
Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].
10. Unless Defendants are permanently restrained and enjoined, they will continue to
engage in the acts, practices, and courses of business set forth in this Complaint and in acts,
practices, and courses of business of similar type and object.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
11. The Commission brings this action pursuant to the authority conferred upon it by

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Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)].
12. The Commission seeks a final judgment: (a) permanently enjoining Defendants
from violating Sections 5(a) and 5(c) of the Securities Act, pursuant to Section 20(b) of the
Securities Act [15 U.S.C. § 77t(b)]; (b) ordering Defendants to disgorge their ill-gotten gains and
to pay prejudgment interest thereon, pursuant to Sections 21(d)(3), (d)(5), and (d)(7) of the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S. Code § 78u(d)(3), (5), (7)]; and (c)
imposing civil money penalties on Defendants pursuant to Section 20(d) of the Securities Act [15
U.S.C § 77t(d)].
JURISDICTION AND VENUE
13. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)].
14. Defendants, directly or indirectly, have made use of the means or instruments of
transportation or communication in interstate commerce or of the mails in connection with the
transactions, acts, practices, and courses of business alleged herein.
15. Venue is proper in the Southern District of New York pursuant to Section 22(a) of
the Securities Act [15 U.S.C. § 77v(a)]. Gemini’s principal place of business is in this District,
and Defendants sold the securities at issue in this case to investors residing in this District.
DEFENDANTS
16. Genesis Global Capital, LLC (“Genesis”) is a Delaware limited liability
company formed in 2017 and a wholly owned subsidiary of Genesis Global Holdco, LLC, which
is wholly owned by Digital Currency Group, Inc. (“DCG”). Genesis’ principal place of business
is in Jersey City, New Jersey. Genesis claims  that it is the “premier institutional digital asset

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financial services firm,”
2
 and “the world’s largest digital asset lender” and that “[h]olders of digital
currencies can earn yield on their assets by lending directly to Genesis, a regulated and trusted
counterparty.” Genesis is registered with FinCEN as a money services business (i.e., money
transmitter). Genesis is one of several companies that DCG operates under the “Genesis” brand.
Genesis is the issuer of securities under the Gemini Earn program.
17. Gemini Trust Company, LLC (“Gemini”) is a New York limited liability trust
company founded in 2014. Gemini is beneficially owned and controlled by Cameron and Tyler
Winklevoss through Winklevoss Capital Fund, LLC. Gemini’s principal place of business is in
New York, New York. Gemini is registered as a New York limited purpose trust company with
the New York State Department of Financial Services (“NYSDFS”).
STATUTORY AND REGULATORY FRAMEWORK
18.  The Securities Act sets forth a longstanding regime of full and fair disclosure in
connection with the offer and sale of securities, in contrast to traditional commercial principles
of caveat emptor. Congress mandated that persons who offer and sell securities to the investing
public provide sufficient, accurate information to allow investors to make informed decisions
before they invest.
19. The definition of a “security” under the Securities Act includes a wide range of
investment vehicles, including “investment contracts” and “notes.” An investment contract is an
investment of money in a common enterprise with a reasonable expectation of profits derived
from the entrepreneurial or managerial efforts of others. Congress defined “security” broadly to
embody a “flexible rather than a static principle, one that is capable of adaptation to meet the
countless and variable schemes devised by those who seek the use of the money of others on the

2
 A “digital asset” is another term for crypto asset.

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promise of profits.” SEC v. W.J. Howey Co., 328 U.S. 293, 299 (1946). According to the
Supreme Court, the broad definition of “security” is “sufficient to encompass virtually any
instrument that might be sold as an investment,” because “Congress’ purpose in enacting the
securities laws was to regulate investments, in whatever form they are made and by whatever
name they are called.” SEC v. Edwards, 540 U.S. 389, 393 (2004) (citations and internal
quotation marks omitted) (emphasis in original). Courts have found that novel or unique
investment vehicles constitute investment contracts, including interests in orange groves, animal
breeding programs, railroads, mobile phones, and enterprises that exist only on the Internet,
including crypto assets.
20. Sections 5(a) and 5(c) of the Securities Act require that an issuer like Genesis
register the offer or sale of securities with the SEC. Similarly, those provisions prohibit Gemini
from engaging in the offer and sale of such unregistered securities. Registration statements
relating to an offering of securities provide public investors with material information about the
issuer and the offering, including but not limited to financial and managerial information, how
the issuer will use offering proceeds, and the risks and trends that affect the enterprise and an
investment in its securities.
BACKGROUND ON CRYPTO ASSETS
21. The term “crypto asset” generally refers to an asset that is issued and transferred
using distributed ledger or blockchain technology, including, but not limited to, so-called
“cryptocurrencies,” “coins,” and “tokens.”
22. A blockchain or distributed ledger is a peer-to-peer database spread across a
network of computers that records all transactions in theoretically unchangeable, digitally
recorded data packages. The system relies on cryptographic techniques for secure recording of

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transactions.
FACTS
I. Genesis and Gemini Offered and Sold Investments
23. In March 2018, Genesis began obtaining crypto assets from large institutional and
other accredited investors in exchange for a promise to pay interest on those investors’ crypto
assets. Genesis obtained crypto assets from its various investors for the use of its primary
business – i.e., to lend crypto assets to Institutional Borrowers for interest – which generated
revenue for Genesis and allowed it to pay interest to large institutional and other accredited
investors. Genesis earned profit by lending the crypto assets to Institutional Borrowers at a
higher rate than it paid to its investors. Genesis pooled the investors’ crypto assets and exercised
discretion over how to deploy the assets to earn income.
24. Eventually, Genesis expanded its business model to transact with not just
institutional and accredited investors, but also retail investors. In particular, in December 2020,
Genesis entered into an agreement with Gemini to offer Gemini customers, including U.S. retail
investors, an opportunity to tender their crypto assets to Genesis in exchange for Genesis’
promise to pay interest.
Gemini Earn Program
25. Specifically, beginning in February 2021, Genesis and Gemini began offering the
Gemini Earn program to retail investors in the United States and Hong Kong, and later
Singapore. There was no minimum investment amount to be eligible to participate in the Gemini
Earn program. As of November 16, 2022, approximately 340,000 retail investors, most residing
in the United States, had crypto assets invested with Genesis through the Gemini Earn program.
By November 2022, the value of retail investors’ crypto assets held by Gemini exceeded the

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collective value of those tendered by institutional and accredited investors.
26. Each Gemini Earn investor entered into a tri-party Gemini Earn Agreement with
Gemini and Genesis. The agreement was a standard agreement and not individually negotiated
with Gemini Earn investors. Under the terms of the Gemini Earn Agreement, Gemini Earn
investors first needed to hold eligible crypto assets with Gemini – either by transferring the
crypto assets to Gemini or acquiring them via Gemini’s crypto asset trading platform. Through
Gemini Earn, investors would then tender their crypto assets to Genesis, with Gemini acting as
the agent for retail investors to facilitate the transaction. Gemini aggregated the crypto assets to
be invested in the Gemini Earn program and placed them in a digital wallet from which Genesis
would take possession of the assets.
27. Genesis determined the types and aggregate amount of each crypto asset that were
eligible to be invested by Gemini Earn investors. Genesis offered and agreed to pay the Gemini
Earn investors in-kind interest on the crypto assets they had invested, which accrued on a daily
basis. Genesis could unilaterally revise the interest rates and the aggregate amount of each crypto
asset that Gemini Earn investors could invest, on a monthly basis.
28. Gemini Earn investors’ returns came from Genesis, with Gemini deducting an
Agent Fee from the returns. Genesis had sole discretion over the gross interest rate that it paid for
each crypto asset, while Gemini had sole discretion over its Agent Fee and thus the net rates of
return offered to Gemini Earn investors.
29. Gemini published the list of crypto assets eligible for investment and the interest
rates offered to Gemini Earn investors on its website as well as in Gemini’s mobile application
(“app”). More than 50 crypto assets were eligible to be invested in the Gemini Earn program,
including Bitcoin, Ether, USD Coin, and Dogecoin.

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30. As of October 2022, the net interest rate offered to Gemini Earn investors ranged
from 0.45% to 8.05%, while Gemini’s Agent Fee ranged from 0.06% to 4.29%, depending on the
type of crypto asset tendered to Genesis. For the three months ended March 31, 2022, Gemini
received approximately $2.7 million in Agent Fees from the Gemini Earn program.
31. The Gemini Earn Agreement provided that the crypto asset transactions were
“open term” unless otherwise specified, and Gemini Earn investors could terminate all, or a
portion, of their investment in Gemini Earn at any time with no withdrawal fee. Per the Gemini
Earn Agreement, Genesis was also obligated to return the invested crypto assets within three
business days of an investor’s request for repayment to a digital wallet controlled by Gemini, and
Gemini would then transfer the crypto assets and any accrued interest to the investor’s Gemini
account where the assets and interest would be available for withdrawal. The Gemini Earn
Agreement also provided that Genesis was responsible for repaying the crypto assets and all
accrued interest to the Gemini Earn investors.
32. Under the terms of the Gemini Earn Agreement, a failure by Genesis to return
crypto assets or a failure by Genesis to pay interest or late fees to a Gemini Earn investor is
considered an event of default. In the event of a default, Gemini may declare the entire Gemini
Earn balance payable, transfer any collateral to hold on behalf of itself and the Gemini Earn
investors, and/or exercise all other rights and remedies available. If the event of default persists
for 30 days or more, Gemini may terminate the Gemini Earn Agreement.
Genesis and Gemini Promoted Gemini Earn as an Investment
33. Genesis and Gemini both touted the profits investors could earn by investing their
crypto assets with Genesis through Gemini Earn. Genesis advertised on its public website that
“[h]olders of digital currencies can earn yield on their assets by lending directly to Genesis.”

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Genesis also published tweets highlighting its partnership with Gemini and the yield that Gemini
Earn investors – i.e., retail investors – could earn. For example, on February 2, 2021, Genesis
published a tweet stating, “Genesis is dedicated to building and partnering to lower barriers to
digital asset markets.”
34. Gemini similarly promoted the profit that investors could earn through the Gemini
Earn program. In a February 2021 press release launching Gemini Earn, Gemini CEO Tyler
Winklevoss stated, “We designed a program that allows our customers the ability to generate a
real return on their crypto holdings.” On February 27, 2021, Gemini also posted a video on
YouTube titled, “Invest Better with Gemini Earn.” On its website, Gemini described how users
would earn interest, noting, “We are excited to launch Gemini Earn and offer more opportunities
for you to grow your portfolio and earn yield.” Similarly, Gemini advertised on its website that
investors could “[p]ut your crypto to work. With Gemini Earn, you can receive up to 8.05% APY
on your cryptocurrency,” and listed the interest rate that investors could earn for each eligible
crypto asset. Gemini also published tweets, including on May 26, 2021, promoting the high
interest rates offered via Gemini Earn, with statements such as the following:

35. Gemini itself repeatedly described Gemini Earn as an investment on its website.
For example, Gemini included this description in an FAQ entitled, “What are the risks of Gemini

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Earn?”:
Cryptocurrency,  like  many  assets,  can  be  volatile  and  subject  to  price
swings.  There  is  always  a  risk  in  investing,  and  each  customer  needs  to
assess their own risk tolerance before making any investment decisions. Our
partners in Gemini Earn have an obligation to return funds according to the
terms  of  their  loan  agreement.  However,  Gemini  Earn  customers  (the
lenders) always assume some level of risk when they decide to lend their
funds.  We  believe  Gemini  Earn  gives  our  retail  investors  another  way  to
stay  long-term  in  the  asset  class  and  have  the  option  to  invest  and  earn
interest, all on the Gemini platform.
(emphasis added)
36. Gemini’s website also claimed that Gemini Earn investors could “receive more
than 100x the average national interest rate, among the highest rates on the market” and that
Gemini Earn “offer[s] more flexibility than other yield-generating cryptocurrency investments.”
37. Additionally, Gemini’s website featured a calculator that would allow a user to
select a deposit amount, crypto asset type, and a time frame to see how much interest could be
earned by tendering crypto assets through Gemini Earn. The calculator would reveal the
projected amount of interest that could be earned by investing the investor’s crypto assets for a
period between one and four years.
Genesis’ Deployment of the Invested Gemini Earn Crypto Assets
38. Genesis pooled on its balance sheet the crypto assets that it received from the
Gemini Earn investors and other investors, and in practice did not segregate the crypto assets it
received from different groups of investors. Genesis retained possession and control over the
investors’ crypto assets on its balance sheet, and determined how much to hold, lend out to
others, and otherwise use. Genesis exercised its discretion in how to use investors’ crypto assets
to generate revenue for its business and to pay the interest rates it promised Gemini Earn
investors and other investors. The Gemini Earn Agreement did not contain any explicit terms
restricting how investors’ crypto assets would be used by Genesis.

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39. Generally, Genesis deployed the Gemini Earn investors’ crypto assets by either
lending them to Institutional Borrowers or using the assets as collateral for Genesis’ own
borrowing. Crypto assets not loaned to Institutional Borrowers or used for collateral were held
by Genesis on its balance sheet in an effort to provide Genesis with liquidity to meet potential
demand for loans as well as to repay the investors in its crypto asset program, including Gemini
Earn. Genesis also had the ability to loan the crypto assets to related parties, including its parent
company.
40. Genesis employed its discretion and judgment in determining the terms of
transactions with Institutional Borrowers. For example, Genesis conducted due diligence on the
Institutional Borrowers before entering into a transaction. Genesis negotiated an initial
agreement with each Institutional Borrower, and then individually negotiated the terms –
including the type of crypto assets to be lent, interest rate, duration of the loan, and collateral (if
any) – of every subsequent lending transaction. Genesis separately evaluated each Institutional
Borrower, as well as market conditions, when determining collateral rates.
41. The returns earned by each Gemini Earn investor were reliant on the pooling of
the invested crypto assets and the ways in which Genesis deployed those assets, including
Genesis’ evaluation of the Institutional Borrowers, negotiation of favorable terms, and
management of market and counterparty risk. When Genesis loaned crypto assets it received
through the Gemini Earn program, the assets were transferred to the Institutional Borrowers and
left Genesis’ balance sheet. Ultimately, the returns of Gemini Earn investors were dependent on
Genesis’ managerial efforts and risk management in its lending activities.
42. The interest income that Genesis received from lending crypto assets to
Institutional Borrowers was used to generate revenue for Genesis and to pay the promised

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interest to Gemini Earn investors and other investors. Genesis did not have any other revenue-
generating activities. For example, for the three months ended March 31, 2022, Genesis received
approximately $169.8 million in interest income from Institutional Borrowers and paid $166.2
million in interest to the investors in its crypto asset program, including Gemini Earn.
43. Genesis also loaned an additional $575 million worth of crypto assets, including
those of Gemini Earn investors, to related party DCG, which DCG used to fund investment
opportunities and repurchase DCG stock from non-employee shareholders in secondary
transactions.
II. The Gemini Earn Program Constituted an Offer and Sale of Securities
A. The Gemini Earn Program Constituted an Offer and Sale of Securities Under
Reves

44. Under Section 2(a)(1) of the Securities Act, the definition of a security includes
any “note.” See 15 U.S.C. §§ 77b, 78c. A note is presumed to be a security unless it bears a
strong resemblance to instruments that are not securities, which courts determine by examining
four factors: (1) the motivation of the parties; (2) the plan of distribution;

(3) the expectations of
the investing public;

and (4) the availability of an alternative regulatory regime that “significantly
reduces the risk of the instrument” for investors other than the securities laws, “thereby rendering
application of the Securities Acts unnecessary.” See Reves v. Ernst & Young, 494 U.S. 56, 64–69
(1990). Under Reves, the Gemini Earn Agreements were notes and offered and sold through
Gemini Earn as securities.
1. The Purpose of the Gemini Earn Program

45. Genesis offered the Gemini Earn program to obtain crypto assets for the use of its
business – namely, to run its institutional lending activities, generate profits for itself, and to pay
the interest promised to Genesis investors, and investors in Gemini Earn were primarily

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interested in the profit they expected the program to generate.
46. Genesis controlled the crypto assets it obtained from investors and had complete
discretion in determining how much to hold, lend and otherwise use. Genesis used the crypto
assets it raised from Gemini Earn investors and other investors to make loans to Institutional
Borrowers or as collateral for Genesis’ own borrowing. Genesis also had the discretion to hold
the assets on its balance sheet to provide Genesis with liquidity to meet potential demand for
loans as well as to repay the investors in its crypto asset program.
47. In turn, investors participated in the Gemini Earn program primarily for profit,
i.e., to receive a return on their crypto assets. Genesis and Gemini both touted the profits
investors could earn by investing their crypto assets with Genesis, including by advertising
Gemini Earn as an investment and touting that investors could receive up to 8.05% annual
percentage yield (“APY”) on their crypto assets. Investors who purchased the Gemini Earn notes
were led to expect that by tendering and giving control over their crypto assets to Genesis, they
would receive profit in the form of interest on those assets.
48. In short, Genesis intended to use the crypto assets for its business and its sole
source of revenue, and the Gemini Earn investors were primarily motivated to earn a profit on
their crypto assets in the form of interest.
2. The Gemini Earn Program was Offered and Sold to a Broad Segment of the
Public

49. Genesis and Gemini publicly advertised the Gemini Earn Agreements, through
Gemini Earn, on websites and on social media. Moreover, the Gemini Earn Agreements were
offered and sold to any U.S. investor, including retail investors. As of November 16, 2022, there
were approximately 340,000 retail investors, the majority of whom resided in the United States,
who had crypto assets invested with Genesis through the Gemini Earn program. The Gemini

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Earn Agreements were offered and sold to a broad segment of the general public.
3. The Investing Public Considered these Notes as Investments

50. Genesis and Gemini, through websites and social media, promoted Gemini Earn
as an investment, specifically as a way to earn high “returns” or “yield” on investors’ crypto
assets. Gemini repeatedly described Gemini Earn as an investment on its own website and social
media and repeatedly touted that the Gemini Earn interest rates were “among the highest rates on
the market” and “higher than most existing options.” Gemini’s website further claimed that
Gemini Earn investors could “receive more than 100x the national interest rate.” Gemini’s
website also included a calculator that showed a user potentially how much interest they could
earn by investing their crypto assets in the Gemini Earn program for a period between one and
four years. The economic realities of the transaction, in which investors had an opportunity to
tender crypto assets with Genesis in exchange for earning interest with some of the “highest
rates” available for crypto assets, further underscore why the investing public considered the
Gemini Earn program to be an investment opportunity.
4. No Alternative Regulatory Regime or Risk-Reducing Factors Exist to Protect
Gemini Earn Investors

51. No alternative regulatory scheme or risk-reducing factors existed to protect
investors with respect to the Gemini Earn program. In its own FAQs, Genesis noted that
“[D]igital assets are not covered by SIPC insurance” and that “[e]stablishing a lending and
borrowing relationship with Genesis is not the same as opening a depository account or a savings
account” and that “[a]ccounts with Genesis do not enjoy FDIC protection.” Genesis Global
Trading, Inc., the SEC registered broker-dealer affiliated with Genesis, did not have a role in the
Gemini Earn program. A lthough Genesis has registered as a money services business (“MSB”)
with FinCEN, the anti-money laundering and recording keeping and reporting requirements of an

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MSB – designed to prevent money services business from being used to facilitate money
laundering and the financing of terrorist activities – do not provide the significant disclosures and
other investor protections afforded by the federal securities laws.
52. Similarly, although Gemini is registered with NYSDFS as a New York limited
purpose trust company, NYSDFS did not have oversight over Genesis. Gemini publicly stated
that Gemini Earn does not operate like a traditional bank account, is not protected by a
governmental program, and is not backed by Gemini itself.  In a February 2021 press release
launching Gemini Earn, Gemini stated that “Gemini Earn is not a depository account. . . . Loans
are not insured by Gemini or any governmental program or institution.” Likewise, on its website,
Gemini noted that “Gemini Earn is structured similarly to non-deposit services offered by
financial institutions and not insured by FDIC, SIPC, any other governmental program, or
Gemini.”
53. Any capital reserve requirements applicable to Gemini did not apply to Genesis or
to the crypto assets tendered to Genesis through Gemini Earn.
54. Under the terms of the Gemini Earn Agreement, Genesis was not required to post
collateral. Gemini told investors, “All lending by you through our Program will be on an
unsecured basis. We will not collect or hold collateral from Borrowers, nor maintain any
collateral account for your benefit.” Although Genesis later provided some collateral to Gemini
in August 2022, the collateral Genesis provided to Gemini was in the form of restricted shares
that could not be liquidated immediately and amounted to only a fraction of the total investor
assets held in Gemini Earn.
55. As evidenced by the current state of Gemini Earn, where investors have been
unable to access their crypto assets or any form of collateral since November 16, 2022, any

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oversight of Genesis as an MSB and Gemini as a  limited purpose trust company did not
adequately reduce the risk of significant harm to Gemini Earn retail investors.
B. The Gemini Earn Program Constituted the Offer and Sale of Investment
Contracts under Howey

56. The offer and sale of Gemini Earn Agreements through the Gemini Earn program
also constitutes the offer and sale of investment contracts under Howey.
1. Gemini Earn Involved the Investment of Money
57. The Gemini Earn program involved an investment of money. Between February
2021 and November 2022, Genesis raised billions of dollars from hundreds of thousands of retail
investors, who tendered crypto assets to Genesis through the program.
2. Gemini Earn Investors and Defendants Invested in a Common Enterprise

58. Investors in Gemini Earn invested in a common enterprise with other investors
and with Defendants.
59. Genesis pooled Gemini Earn investors’ and other investors’ crypto assets on
Genesis’ balance sheet, and used those assets in order to generate returns for both Genesis and
investors, including Gemini Earn investors. Genesis did not manage individual or separate
accounts for each investor in Gemini Earn. Instead, the returns earned by each investor were
reliant on the pooling of the invested crypto assets. As the invested crypto assets were not
segregated in any way by Genesis, each investor’s fortune was tied to the fortunes of the other
investors.
60. Gemini Earn investors’ fortunes were also tied to Genesis’ fortunes; both Genesis
and Gemini Earn investors earned profits when Genesis deployed the pooled assets. Moreover,
Genesis’ current situation, where it has experienced withdrawal requests that exceed its current
liquidity and has consequently restricted Gemini Earn investors from withdrawing their crypto

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assets and begun a restructuring process,  further demonstrates that the fortunes of Genesis and
the fortunes of each Gemini Earn investor are tied to one another in a common enterprise.
3. Gemini Earn Investors Reasonably Expected t o Profit From the Efforts of
Defendants

61. Investors in the Gemini Earn program reasonably expected to profit from the
efforts of Defendants.
62. From its inception, Defendants have explicitly marketed the Gemini Earn
program as an investment opportunity which led investors to reasonably expect to profit from
their efforts. As detailed above, through their websites and social media channels, both Genesis
and Gemini publicly touted the ability for investors to earn yield or returns via Gemini Earn.
Gemini repeatedly itself described Gemini Earn as an investment on its own website; repeatedly
touted that the Gemini Earn interest rates were “among the highest rates on the market” and that
Gemini Earn investors could “receive more than 100x the national interest rate”; and Gemini’s
website illustrated how much interest Gemini Earn investors could potentially earn by investing
their crypto assets for a period between one and four years.
63. Genesis also described itself as the “premier institutional digital asset financial
services firm,” and “the world’s largest digital asset lender” and that “[h]olders of digital
currencies can earn yield on their assets by lending directly to Genesis, a regulated and trusted
counterparty.” Accordingly, Gemini Earn investors were led to expect that Defendants’ efforts to
generate the investment returns – i.e., the promised interest – would result in profit for investors.
64. As part of the Gemini Earn Agreements, investors ceded   control over their crypto
assets to Genesis, who has complete discretion in deploying the crypto assets. Genesis, not
investors, undertook various complex tasks of pooling Gemini Earn crypto assets, identifying
Institutional Borrowers to serve as counterparties, negotiating individual agreements with those

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counterparties, and managing market and counterparty risk. Investors understood that Genesis
would conduct due diligence on Institutional Borrowers and evaluate market conditions in
determining the appropriate collateral levels.
65. Moreover, the economic realities of the Gemini Earn program demonstrate that
Genesis was motivated to use its experience and skill as the “premier institutional digital asset
financial services firm” and its economic power as “the world’s largest digital asset lender ” to
select appropriate Institutional Borrowers to serve as counterparties, negotiate for the highest
interest rates from those Institutional Borrowers, and set appropriate collateral levels, in order to
generate maximum profit for itself. Defendants’ efforts were essential to the success or failure of
the enterprise.
66. Investors understood that, on a monthly basis, the interest rate for their Gemini
Earn investments would be revised by Genesis, reflecting Genesis’ ongoing managerial efforts to
pay among “the highest rates in the market.”
67. Defendants’ statements and actions, and the economic reality of the Gemini Earn
program, have led reasonable investors to expect Genesis to undertake significant and essential
technical, managerial, and entrepreneurial efforts on their behalf, and investors in the Gemini
Earn program reasonably expected to profit from those efforts.
III. Defendants Have Failed to Register their Offer and Sale of Securities Through
Gemini Earn with the Commission

68. Defendants offered and sold securities through the Gemini Earn program.
69. Defendants have used interstate commerce to offer and sell securities through
Gemini Earn by, among other things, engaging in general solicitation through their websites and
other promotional materials, including social media.
70. Defendants have never had a registration statement filed or in effect with the SEC

20

for their offers and sales of securities through the Gemini Earn program.
71. Defendants’ public disclosures contained selective or no information about
Genesis’ financial history, audited financial statements, management discussion and analysis of
financial condition and results of operations, and ability to generate profits. Gemini Earn
investors also had limited or inadequate information about Genesis’ operations, financial
condition, liquidity, or other factors relevant in considering whether to invest in the Gemini Earn
program. Investors also lacked full and detailed information regarding how Genesis deploys their
crypto assets, including its exposure to volatility in crypto asset markets, the financial condition
of Genesis’ counterparties and the amount of collateral Genesis obtained, if any, as part of its
loans to Institutional Borrowers. In short, Gemini Earn investors lacked information that issuers
provide under the Securities Act when they solicit public investment.
CLAIM FOR RELIEF
Violations of Section 5(a) and 5(c) of the Securities Act
[15 U.S.C. §§ 77e(a) and 77e(c)]

72. The SEC realleges and incorporates by reference paragraphs 1 through 71 above.
73. By virtue of the foregoing, without a registration statement in effect as to that
security, Defendants, directly and indirectly, (a) made use of the means and instruments of
transportation or communications in interstate commerce or of the mails to sell securities through
the use or medium of any prospectus or otherwise; (b) carried or caused to be carried through the
mails or in interstate commerce, by any means or instruments of transportation, any such security
for the purpose of sale or for delivery after sale; and (c) made use of the means and instruments
of transportation or communication in interstate commerce or of the mails to offer to sell through
the use or medium of a prospectus or otherwise, securities as to which no registration statement
had been filed.

21

74. By engaging in the conduct described above, each Defendant violated, and unless
restrained and enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act [15
U.S.C. §§ 77e(a) and 77e(c)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Defendants, and each of their respective agents, servants,
employees, attorneys and other persons in active concert or participation with any of them, from
violating, directly or indirectly, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e(a)
and 77e(c)];
II.
Ordering Defendants to disgorge all ill-gotten gains obtained within the statute of
limitations, with prejudgment interest thereon, pursuant to Sections 21(d)(3), (d)(5), and (d)(7) of
the Exchange Act [15 U.S.C. § 78u(d)(3), (5), (7)];
III.
Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the Securities Act
[15 U.S.C. § 77t(d)]; and
IV.
Granting any other and further relief this Court may deem just and proper for the benefit of
investors.

22

JURY DEMAND
The Commission demands a trial by jury.

Dated: January 12, 2023   /s/ Edward J. Reilly
Edward J. Reilly*
Jonathan Austin (SDNY Bar No. JA-2073)
Ashley Sprague
Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
         100 F Street NE
          Washington, DC 20549
  (202) 551-6791 (Reilly)
          Email: [email protected]
*Pending admission pro hac vice

Of Counsel
Stacy Bogert
Deborah A. Tarasevich
James P. Connor

UNITED STATES DISTRICT COURT 
 SOUTHERN DISTRICT OF NEW YORK 
 
 
 

23-cv-287  
 
ECF Case 

 
Complaint 
Jury Trial Demanded 

 
 

 
 

Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”) files this 

Complaint against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC 

(“Gemini”) (collectively, “Defendants”) and alleges as follows: 

SUMMARY 

1. Between February 2021 and November 2022, Genesis and Gemini engaged in an 

unregistered offer and sale of securities to U.S. retail investors, in violation of the federal 

securities laws. Through an investment opportunity that Defendants called the “Gemini Earn” 

program, investors tendered crypto assets to Genesis and, in exchange, Genesis promised to pay 

interest on those assets to investors. Through this unregistered offering, Defendants raised 

billions of dollars’ worth of crypto assets, principally from U.S. retail investors. 

2. Both Defendants were integral to the operation and success of the Gemini Earn 

program. Genesis was the issuer and entity that received, pooled, deployed, and paid interest on 

investors’ assets. Genesis and Gemini marketed the Gemini Earn program through social media 

and Gemini’s website, touting the high interest rates that investors could earn through Gemini 

Earn. And Gemini provided retail investors with access to Genesis, which otherwise only 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
 

Plaintiff, 
 

v. 
 
GENESIS GLOBAL CAPITAL, LLC and           
GEMINI TRUST COMPANY, LLC, 
 

Defendants. 

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2 
 

engaged in crypto asset transactions with large institutional and other accredited investors.1  

Crucially, both Defendants profited from the partnership and offering.   

3. To participate in the Gemini Earn program, Genesis and Gemini required that 

investors enter into a tri-party Master Digital Asset Loan Agreement with Genesis and Gemini 

(“Gemini Earn Agreement”), whereby Gemini Earn investors provided crypto assets to Genesis, 

with Gemini acting as the agent in the issuance. Genesis would send interest payments to 

Gemini, which would then deduct an “Agent Fee” before distributing the remainder of the 

interest payments to Gemini Earn investors.  

4. Genesis pooled the crypto assets from Gemini Earn investors with assets from 

other investors. Genesis then deployed the crypto assets – primarily by lending the crypto assets 

to institutional counterparties (“Institutional Borrowers”) – in order to generate revenue for its 

business, including the revenue necessary to pay interest to Gemini Earn investors. Genesis 

earned revenue by lending the crypto assets at a higher rate than it paid to Gemini Earn and other 

investors.  

5. The Genesis Earn Agreements, as offered and sold through the Gemini Earn 

program, were securities that Genesis and Gemini offered and sold to the investing public. 

6. Defendants offered and sold the Gemini Earn Agreements through the Gemini 

Earn Program without registering the offer and sale with the SEC as required by the federal 

securities laws. As a result, investors lacked material information about the Gemini Earn 

program that would have been relevant to their investment decisions. Instead of providing 

investors with the full panoply of information required by the federal securities laws, Defendants 

                                                 
1 “Accredited investors” are those persons whose financial sophistication and ability to sustain the risk of 
loss of investment or fend for themselves render the protections of the Securities Act of 1933’s 
registration process unnecessary. See Rule 501(a) of the Securities Act of 1933 [17 C.F.R. § 230.501].   

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3 
 

have instead only made selective and inadequate disclosures. 

7. The U.S. retail investors who participated in the Gemini Earn program have 

suffered significant harm. In November 2022, Genesis unilaterally announced that it would not 

allow hundreds of thousands of retail investors to withdraw their crypto assets from Gemini Earn 

because of “withdrawal requests which have exceeded our current liquidity” following volatility 

in the crypto asset market. At the time, Genesis held approximately $900 million in investor 

assets from approximately 340,000 Gemini Earn investors, most residing in the United States. As 

of the date of this Complaint, these retail investors still cannot withdraw their assets, and Genesis 

has formed a special committee to oversee a restructuring process. 

8. While the Gemini Earn program has been terminated, both Genesis and Gemini 

continue to do business in the crypto asset industry. In particular, Genesis intends to reengage in 

crypto asset lending activities. Gemini continues to hold billions of dollars’ worth of crypto 

assets on behalf of retail investors in connection with its trading platform and other activity in 

this industry. Thus, Defendants remain positioned to violate the registration provisions if they are 

not enjoined from doing so.  

VIOLATIONS 

9. By engaging in the conduct described in this Complaint, Defendants violated 

Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 

10. Unless Defendants are permanently restrained and enjoined, they will continue to 

engage in the acts, practices, and courses of business set forth in this Complaint and in acts, 

practices, and courses of business of similar type and object. 

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

11. The Commission brings this action pursuant to the authority conferred upon it by 

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4 
 

Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)]. 

12. The Commission seeks a final judgment: (a) permanently enjoining Defendants 

from violating Sections 5(a) and 5(c) of the Securities Act, pursuant to Section 20(b) of the 

Securities Act [15 U.S.C. § 77t(b)]; (b) ordering Defendants to disgorge their ill-gotten gains and 

to pay prejudgment interest thereon, pursuant to Sections 21(d)(3), (d)(5), and (d)(7) of the 

Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S. Code § 78u(d)(3), (5), (7)]; and (c) 

imposing civil money penalties on Defendants pursuant to Section 20(d) of the Securities Act [15 

U.S.C § 77t(d)].  

JURISDICTION AND VENUE 

13. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)]. 

14. Defendants, directly or indirectly, have made use of the means or instruments of 

transportation or communication in interstate commerce or of the mails in connection with the 

transactions, acts, practices, and courses of business alleged herein. 

15. Venue is proper in the Southern District of New York pursuant to Section 22(a) of 

the Securities Act [15 U.S.C. § 77v(a)]. Gemini’s principal place of business is in this District, 

and Defendants sold the securities at issue in this case to investors residing in this District. 

DEFENDANTS 

16. Genesis Global Capital, LLC (“Genesis”) is a Delaware limited liability 

company formed in 2017 and a wholly owned subsidiary of Genesis Global Holdco, LLC, which 

is wholly owned by Digital Currency Group, Inc. (“DCG”). Genesis’ principal place of business 

is in Jersey City, New Jersey. Genesis claims that it is the “premier institutional digital asset 

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5 
 

financial services firm,”2 and “the world’s largest digital asset lender” and that “[h]olders of digital 

currencies can earn yield on their assets by lending directly to Genesis, a regulated and trusted 

counterparty.” Genesis is registered with FinCEN as a money services business (i.e., money 

transmitter). Genesis is one of several companies that DCG operates under the “Genesis” brand. 

Genesis is the issuer of securities under the Gemini Earn program. 

17. Gemini Trust Company, LLC (“Gemini”) is a New York limited liability trust 

company founded in 2014. Gemini is beneficially owned and controlled by Cameron and Tyler 

Winklevoss through Winklevoss Capital Fund, LLC. Gemini’s principal place of business is in 

New York, New York. Gemini is registered as a New York limited purpose trust company with 

the New York State Department of Financial Services (“NYSDFS”).   

STATUTORY AND REGULATORY FRAMEWORK 

18.  The Securities Act sets forth a longstanding regime of full and fair disclosure in 

connection with the offer and sale of securities, in contrast to traditional commercial principles 

of caveat emptor. Congress mandated that persons who offer and sell securities to the investing 

public provide sufficient, accurate information to allow investors to make informed decisions 

before they invest.   

19. The definition of a “security” under the Securities Act includes a wide range of 

investment vehicles, including “investment contracts” and “notes.” An investment contract is an 

investment of money in a common enterprise with a reasonable expectation of profits derived 

from the entrepreneurial or managerial efforts of others. Congress defined “security” broadly to 

embody a “flexible rather than a static principle, one that is capable of adaptation to meet the 

countless and variable schemes devised by those who seek the use of the money of others on the 

                                                 
2 A “digital asset” is another term for crypto asset.  

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promise of profits.” SEC v. W.J. Howey Co., 328 U.S. 293, 299 (1946). According to the 

Supreme Court, the broad definition of “security” is “sufficient to encompass virtually any 

instrument that might be sold as an investment,” because “Congress’ purpose in enacting the 

securities laws was to regulate investments, in whatever form they are made and by whatever 

name they are called.” SEC v. Edwards, 540 U.S. 389, 393 (2004) (citations and internal 

quotation marks omitted) (emphasis in original). Courts have found that novel or unique 

investment vehicles constitute investment contracts, including interests in orange groves, animal 

breeding programs, railroads, mobile phones, and enterprises that exist only on the Internet, 

including crypto assets.  

20. Sections 5(a) and 5(c) of the Securities Act require that an issuer like Genesis 

register the offer or sale of securities with the SEC. Similarly, those provisions prohibit Gemini 

from engaging in the offer and sale of such unregistered securities. Registration statements 

relating to an offering of securities provide public investors with material information about the 

issuer and the offering, including but not limited to financial and managerial information, how 

the issuer will use offering proceeds, and the risks and trends that affect the enterprise and an 

investment in its securities.    

BACKGROUND ON CRYPTO ASSETS 

21. The term “crypto asset” generally refers to an asset that is issued and transferred 

using distributed ledger or blockchain technology, including, but not limited to, so-called 

“cryptocurrencies,” “coins,” and “tokens.” 

22. A blockchain or distributed ledger is a peer-to-peer database spread across a 

network of computers that records all transactions in theoretically unchangeable, digitally 

recorded data packages. The system relies on cryptographic techniques for secure recording of 

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transactions. 

FACTS 

I. Genesis and Gemini Offered and Sold Investments  

23. In March 2018, Genesis began obtaining crypto assets from large institutional and 

other accredited investors in exchange for a promise to pay interest on those investors’ crypto 

assets. Genesis obtained crypto assets from its various investors for the use of its primary 

business – i.e., to lend crypto assets to Institutional Borrowers for interest – which generated 

revenue for Genesis and allowed it to pay interest to large institutional and other accredited 

investors. Genesis earned profit by lending the crypto assets to Institutional Borrowers at a 

higher rate than it paid to its investors. Genesis pooled the investors’ crypto assets and exercised 

discretion over how to deploy the assets to earn income.  

24. Eventually, Genesis expanded its business model to transact with not just 

institutional and accredited investors, but also retail investors. In particular, in December 2020, 

Genesis entered into an agreement with Gemini to offer Gemini customers, including U.S. retail 

investors, an opportunity to tender their crypto assets to Genesis in exchange for Genesis’ 

promise to pay interest.  

Gemini Earn Program 

25. Specifically, beginning in February 2021, Genesis and Gemini began offering the 

Gemini Earn program to retail investors in the United States and Hong Kong, and later 

Singapore. There was no minimum investment amount to be eligible to participate in the Gemini 

Earn program. As of November 16, 2022, approximately 340,000 retail investors, most residing 

in the United States, had crypto assets invested with Genesis through the Gemini Earn program.  

By November 2022, the value of retail investors’ crypto assets held by Gemini exceeded the 

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collective value of those tendered by institutional and accredited investors.    

26. Each Gemini Earn investor entered into a tri-party Gemini Earn Agreement with 

Gemini and Genesis. The agreement was a standard agreement and not individually negotiated 

with Gemini Earn investors. Under the terms of the Gemini Earn Agreement, Gemini Earn 

investors first needed to hold eligible crypto assets with Gemini – either by transferring the 

crypto assets to Gemini or acquiring them via Gemini’s crypto asset trading platform. Through 

Gemini Earn, investors would then tender their crypto assets to Genesis, with Gemini acting as 

the agent for retail investors to facilitate the transaction. Gemini aggregated the crypto assets to 

be invested in the Gemini Earn program and placed them in a digital wallet from which Genesis 

would take possession of the assets.   

27. Genesis determined the types and aggregate amount of each crypto asset that were 

eligible to be invested by Gemini Earn investors. Genesis offered and agreed to pay the Gemini 

Earn investors in-kind interest on the crypto assets they had invested, which accrued on a daily 

basis. Genesis could unilaterally revise the interest rates and the aggregate amount of each crypto 

asset that Gemini Earn investors could invest, on a monthly basis.  

28. Gemini Earn investors’ returns came from Genesis, with Gemini deducting an 

Agent Fee from the returns. Genesis had sole discretion over the gross interest rate that it paid for 

each crypto asset, while Gemini had sole discretion over its Agent Fee and thus the net rates of 

return offered to Gemini Earn investors.  

29. Gemini published the list of crypto assets eligible for investment and the interest 

rates offered to Gemini Earn investors on its website as well as in Gemini’s mobile application 

(“app”). More than 50 crypto assets were eligible to be invested in the Gemini Earn program, 

including Bitcoin, Ether, USD Coin, and Dogecoin. 

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30. As of October 2022, the net interest rate offered to Gemini Earn investors ranged 

from 0.45% to 8.05%, while Gemini’s Agent Fee ranged from 0.06% to 4.29%, depending on the 

type of crypto asset tendered to Genesis. For the three months ended March 31, 2022, Gemini 

received approximately $2.7 million in Agent Fees from the Gemini Earn program. 

31. The Gemini Earn Agreement provided that the crypto asset transactions were 

“open term” unless otherwise specified, and Gemini Earn investors could terminate all, or a 

portion, of their investment in Gemini Earn at any time with no withdrawal fee. Per the Gemini 

Earn Agreement, Genesis was also obligated to return the invested crypto assets within three 

business days of an investor’s request for repayment to a digital wallet controlled by Gemini, and 

Gemini would then transfer the crypto assets and any accrued interest to the investor’s Gemini 

account where the assets and interest would be available for withdrawal. The Gemini Earn 

Agreement also provided that Genesis was responsible for repaying the crypto assets and all 

accrued interest to the Gemini Earn investors.  

32. Under the terms of the Gemini Earn Agreement, a failure by Genesis to return 

crypto assets or a failure by Genesis to pay interest or late fees to a Gemini Earn investor is 

considered an event of default. In the event of a default, Gemini may declare the entire Gemini 

Earn balance payable, transfer any collateral to hold on behalf of itself and the Gemini Earn 

investors, and/or exercise all other rights and remedies available. If the event of default persists 

for 30 days or more, Gemini may terminate the Gemini Earn Agreement. 

Genesis and Gemini Promoted Gemini Earn as an Investment 

33. Genesis and Gemini both touted the profits investors could earn by investing their 

crypto assets with Genesis through Gemini Earn. Genesis advertised on its public website that 

“[h]olders of digital currencies can earn yield on their assets by lending directly to Genesis.” 

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Genesis also published tweets highlighting its partnership with Gemini and the yield that Gemini 

Earn investors – i.e., retail investors – could earn. For example, on February 2, 2021, Genesis 

published a tweet stating, “Genesis is dedicated to building and partnering to lower barriers to 

digital asset markets.”  

34. Gemini similarly promoted the profit that investors could earn through the Gemini 

Earn program. In a February 2021 press release launching Gemini Earn, Gemini CEO Tyler 

Winklevoss stated, “We designed a program that allows our customers the ability to generate a 

real return on their crypto holdings.” On February 27, 2021, Gemini also posted a video on 

YouTube titled, “Invest Better with Gemini Earn.” On its website, Gemini described how users 

would earn interest, noting, “We are excited to launch Gemini Earn and offer more opportunities 

for you to grow your portfolio and earn yield.” Similarly, Gemini advertised on its website that 

investors could “[p]ut your crypto to work. With Gemini Earn, you can receive up to 8.05% APY 

on your cryptocurrency,” and listed the interest rate that investors could earn for each eligible 

crypto asset. Gemini also published tweets, including on May 26, 2021, promoting the high 

interest rates offered via Gemini Earn, with statements such as the following: 

 

 

 

 

 

 

35. Gemini itself repeatedly described Gemini Earn as an investment on its website.  

For example, Gemini included this description in an FAQ entitled, “What are the risks of Gemini 

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Earn?”: 

Cryptocurrency, like many assets, can be volatile and subject to price 
swings. There is always a risk in investing, and each customer needs to 
assess their own risk tolerance before making any investment decisions. Our 
partners in Gemini Earn have an obligation to return funds according to the 
terms of their loan agreement. However, Gemini Earn customers (the 
lenders) always assume some level of risk when they decide to lend their 
funds. We believe Gemini Earn gives our retail investors another way to 
stay long-term in the asset class and have the option to invest and earn 
interest, all on the Gemini platform.  

(emphasis added) 

36. Gemini’s website also claimed that Gemini Earn investors could “receive more 

than 100x the average national interest rate, among the highest rates on the market” and that 

Gemini Earn “offer[s] more flexibility than other yield-generating cryptocurrency investments.”  

37. Additionally, Gemini’s website featured a calculator that would allow a user to 

select a deposit amount, crypto asset type, and a time frame to see how much interest could be 

earned by tendering crypto assets through Gemini Earn. The calculator would reveal the 

projected amount of interest that could be earned by investing the investor’s crypto assets for a 

period between one and four years.    

Genesis’ Deployment of the Invested Gemini Earn Crypto Assets 

38. Genesis pooled on its balance sheet the crypto assets that it received from the 

Gemini Earn investors and other investors, and in practice did not segregate the crypto assets it 

received from different groups of investors. Genesis retained possession and control over the 

investors’ crypto assets on its balance sheet, and determined how much to hold, lend out to 

others, and otherwise use. Genesis exercised its discretion in how to use investors’ crypto assets 

to generate revenue for its business and to pay the interest rates it promised Gemini Earn 

investors and other investors. The Gemini Earn Agreement did not contain any explicit terms 

restricting how investors’ crypto assets would be used by Genesis. 

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39. Generally, Genesis deployed the Gemini Earn investors’ crypto assets by either 

lending them to Institutional Borrowers or using the assets as collateral for Genesis’ own 

borrowing. Crypto assets not loaned to Institutional Borrowers or used for collateral were held 

by Genesis on its balance sheet in an effort to provide Genesis with liquidity to meet potential 

demand for loans as well as to repay the investors in its crypto asset program, including Gemini 

Earn. Genesis also had the ability to loan the crypto assets to related parties, including its parent 

company.  

40. Genesis employed its discretion and judgment in determining the terms of 

transactions with Institutional Borrowers. For example, Genesis conducted due diligence on the 

Institutional Borrowers before entering into a transaction. Genesis negotiated an initial 

agreement with each Institutional Borrower, and then individually negotiated the terms – 

including the type of crypto assets to be lent, interest rate, duration of the loan, and collateral (if 

any) – of every subsequent lending transaction. Genesis separately evaluated each Institutional 

Borrower, as well as market conditions, when determining collateral rates.  

41. The returns earned by each Gemini Earn investor were reliant on the pooling of 

the invested crypto assets and the ways in which Genesis deployed those assets, including 

Genesis’ evaluation of the Institutional Borrowers, negotiation of favorable terms, and 

management of market and counterparty risk. When Genesis loaned crypto assets it received 

through the Gemini Earn program, the assets were transferred to the Institutional Borrowers and 

left Genesis’ balance sheet. Ultimately, the returns of Gemini Earn investors were dependent on 

Genesis’ managerial efforts and risk management in its lending activities.  

42. The interest income that Genesis received from lending crypto assets to 

Institutional Borrowers was used to generate revenue for Genesis and to pay the promised 

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interest to Gemini Earn investors and other investors. Genesis did not have any other revenue-

generating activities. For example, for the three months ended March 31, 2022, Genesis received 

approximately $169.8 million in interest income from Institutional Borrowers and paid $166.2 

million in interest to the investors in its crypto asset program, including Gemini Earn. 

43. Genesis also loaned an additional $575 million worth of crypto assets, including 

those of Gemini Earn investors, to related party DCG, which DCG used to fund investment 

opportunities and repurchase DCG stock from non-employee shareholders in secondary 

transactions.   

II. The Gemini Earn Program Constituted an Offer and Sale of Securities 

A. The Gemini Earn Program Constituted an Offer and Sale of Securities Under 
Reves  
 

44. Under Section 2(a)(1) of the Securities Act, the definition of a security includes 

any “note.” See 15 U.S.C. §§ 77b, 78c. A note is presumed to be a security unless it bears a 

strong resemblance to instruments that are not securities, which courts determine by examining 

four factors: (1) the motivation of the parties; (2) the plan of distribution; (3) the expectations of 

the investing public; and (4) the availability of an alternative regulatory regime that “significantly 

reduces the risk of the instrument” for investors other than the securities laws, “thereby rendering 

application of the Securities Acts unnecessary.” See Reves v. Ernst & Young, 494 U.S. 56, 64–69 

(1990). Under Reves, the Gemini Earn Agreements were notes and offered and sold through 

Gemini Earn as securities. 

1. The Purpose of the Gemini Earn Program  
 

45. Genesis offered the Gemini Earn program to obtain crypto assets for the use of its 

business – namely, to run its institutional lending activities, generate profits for itself, and to pay 

the interest promised to Genesis investors, and investors in Gemini Earn were primarily 

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interested in the profit they expected the program to generate. 

46. Genesis controlled the crypto assets it obtained from investors and had complete 

discretion in determining how much to hold, lend and otherwise use. Genesis used the crypto 

assets it raised from Gemini Earn investors and other investors to make loans to Institutional 

Borrowers or as collateral for Genesis’ own borrowing. Genesis also had the discretion to hold 

the assets on its balance sheet to provide Genesis with liquidity to meet potential demand for 

loans as well as to repay the investors in its crypto asset program.  

47. In turn, investors participated in the Gemini Earn program primarily for profit, 

i.e., to receive a return on their crypto assets. Genesis and Gemini both touted the profits 

investors could earn by investing their crypto assets with Genesis, including by advertising 

Gemini Earn as an investment and touting that investors could receive up to 8.05% annual 

percentage yield (“APY”) on their crypto assets. Investors who purchased the Gemini Earn notes 

were led to expect that by tendering and giving control over their crypto assets to Genesis, they 

would receive profit in the form of interest on those assets.   

48. In short, Genesis intended to use the crypto assets for its business and its sole 

source of revenue, and the Gemini Earn investors were primarily motivated to earn a profit on 

their crypto assets in the form of interest.  

2. The Gemini Earn Program was Offered and Sold to a Broad Segment of the 
Public 
 

49. Genesis and Gemini publicly advertised the Gemini Earn Agreements, through 

Gemini Earn, on websites and on social media. Moreover, the Gemini Earn Agreements were 

offered and sold to any U.S. investor, including retail investors. As of November 16, 2022, there 

were approximately 340,000 retail investors, the majority of whom resided in the United States, 

who had crypto assets invested with Genesis through the Gemini Earn program. The Gemini 

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Earn Agreements were offered and sold to a broad segment of the general public. 

3. The Investing Public Considered these Notes as Investments 
 

50. Genesis and Gemini, through websites and social media, promoted Gemini Earn 

as an investment, specifically as a way to earn high “returns” or “yield” on investors’ crypto 

assets. Gemini repeatedly described Gemini Earn as an investment on its own website and social 

media and repeatedly touted that the Gemini Earn interest rates were “among the highest rates on 

the market” and “higher than most existing options.” Gemini’s website further claimed that 

Gemini Earn investors could “receive more than 100x the national interest rate.” Gemini’s 

website also included a calculator that showed a user potentially how much interest they could 

earn by investing their crypto assets in the Gemini Earn program for a period between one and 

four years. The economic realities of the transaction, in which investors had an opportunity to 

tender crypto assets with Genesis in exchange for earning interest with some of the “highest 

rates” available for crypto assets, further underscore why the investing public considered the 

Gemini Earn program to be an investment opportunity.  

4. No Alternative Regulatory Regime or Risk-Reducing Factors Exist to Protect 
Gemini Earn Investors  
 

51. No alternative regulatory scheme or risk-reducing factors existed to protect 

investors with respect to the Gemini Earn program. In its own FAQs, Genesis noted that 

“[D]igital assets are not covered by SIPC insurance” and that “[e]stablishing a lending and 

borrowing relationship with Genesis is not the same as opening a depository account or a savings 

account” and that “[a]ccounts with Genesis do not enjoy FDIC protection.” Genesis Global 

Trading, Inc., the SEC registered broker-dealer affiliated with Genesis, did not have a role in the 

Gemini Earn program. Although Genesis has registered as a money services business (“MSB”) 

with FinCEN, the anti-money laundering and recording keeping and reporting requirements of an 

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MSB – designed to prevent money services business from being used to facilitate money 

laundering and the financing of terrorist activities – do not provide the significant disclosures and 

other investor protections afforded by the federal securities laws. 

52. Similarly, although Gemini is registered with NYSDFS as a New York limited 

purpose trust company, NYSDFS did not have oversight over Genesis. Gemini publicly stated 

that Gemini Earn does not operate like a traditional bank account, is not protected by a 

governmental program, and is not backed by Gemini itself.  In a February 2021 press release 

launching Gemini Earn, Gemini stated that “Gemini Earn is not a depository account. . . . Loans 

are not insured by Gemini or any governmental program or institution.” Likewise, on its website, 

Gemini noted that “Gemini Earn is structured similarly to non-deposit services offered by 

financial institutions and not insured by FDIC, SIPC, any other governmental program, or 

Gemini.”  

53. Any capital reserve requirements applicable to Gemini did not apply to Genesis or 

to the crypto assets tendered to Genesis through Gemini Earn. 

54. Under the terms of the Gemini Earn Agreement, Genesis was not required to post 

collateral. Gemini told investors, “All lending by you through our Program will be on an 

unsecured basis. We will not collect or hold collateral from Borrowers, nor maintain any 

collateral account for your benefit.” Although Genesis later provided some collateral to Gemini 

in August 2022, the collateral Genesis provided to Gemini was in the form of restricted shares 

that could not be liquidated immediately and amounted to only a fraction of the total investor 

assets held in Gemini Earn.   

55. As evidenced by the current state of Gemini Earn, where investors have been 

unable to access their crypto assets or any form of collateral since November 16, 2022, any 

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oversight of Genesis as an MSB and Gemini as a limited purpose trust company did not 

adequately reduce the risk of significant harm to Gemini Earn retail investors.   

B. The Gemini Earn Program Constituted the Offer and Sale of Investment 
Contracts under Howey  
 

56. The offer and sale of Gemini Earn Agreements through the Gemini Earn program 

also constitutes the offer and sale of investment contracts under Howey. 

1. Gemini Earn Involved the Investment of Money  

57. The Gemini Earn program involved an investment of money. Between February 

2021 and November 2022, Genesis raised billions of dollars from hundreds of thousands of retail 

investors, who tendered crypto assets to Genesis through the program.   

2. Gemini Earn Investors and Defendants Invested in a Common Enterprise  
 

58. Investors in Gemini Earn invested in a common enterprise with other investors 

and with Defendants. 

59. Genesis pooled Gemini Earn investors’ and other investors’ crypto assets on 

Genesis’ balance sheet, and used those assets in order to generate returns for both Genesis and 

investors, including Gemini Earn investors. Genesis did not manage individual or separate 

accounts for each investor in Gemini Earn. Instead, the returns earned by each investor were 

reliant on the pooling of the invested crypto assets. As the invested crypto assets were not 

segregated in any way by Genesis, each investor’s fortune was tied to the fortunes of the other 

investors.  

60. Gemini Earn investors’ fortunes were also tied to Genesis’ fortunes; both Genesis 

and Gemini Earn investors earned profits when Genesis deployed the pooled assets. Moreover, 

Genesis’ current situation, where it has experienced withdrawal requests that exceed its current 

liquidity and has consequently restricted Gemini Earn investors from withdrawing their crypto 

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assets and begun a restructuring process, further demonstrates that the fortunes of Genesis and 

the fortunes of each Gemini Earn investor are tied to one another in a common enterprise.   

3. Gemini Earn Investors Reasonably Expected to Profit From the Efforts of 
Defendants 
 

61. Investors in the Gemini Earn program reasonably expected to profit from the 

efforts of Defendants.   

62. From its inception, Defendants have explicitly marketed the Gemini Earn 

program as an investment opportunity which led investors to reasonably expect to profit from 

their efforts. As detailed above, through their websites and social media channels, both Genesis 

and Gemini publicly touted the ability for investors to earn yield or returns via Gemini Earn. 

Gemini repeatedly itself described Gemini Earn as an investment on its own website; repeatedly 

touted that the Gemini Earn interest rates were “among the highest rates on the market” and that 

Gemini Earn investors could “receive more than 100x the national interest rate”; and Gemini’s 

website illustrated how much interest Gemini Earn investors could potentially earn by investing 

their crypto assets for a period between one and four years.   

63. Genesis also described itself as the “premier institutional digital asset financial 

services firm,” and “the world’s largest digital asset lender” and that “[h]olders of digital 

currencies can earn yield on their assets by lending directly to Genesis, a regulated and trusted 

counterparty.” Accordingly, Gemini Earn investors were led to expect that Defendants’ efforts to 

generate the investment returns – i.e., the promised interest – would result in profit for investors. 

64. As part of the Gemini Earn Agreements, investors ceded control over their crypto 

assets to Genesis, who has complete discretion in deploying the crypto assets. Genesis, not 

investors, undertook various complex tasks of pooling Gemini Earn crypto assets, identifying 

Institutional Borrowers to serve as counterparties, negotiating individual agreements with those 

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counterparties, and managing market and counterparty risk. Investors understood that Genesis 

would conduct due diligence on Institutional Borrowers and evaluate market conditions in 

determining the appropriate collateral levels.   

65. Moreover, the economic realities of the Gemini Earn program demonstrate that 

Genesis was motivated to use its experience and skill as the “premier institutional digital asset 

financial services firm” and its economic power as “the world’s largest digital asset lender ” to 

select appropriate Institutional Borrowers to serve as counterparties, negotiate for the highest 

interest rates from those Institutional Borrowers, and set appropriate collateral levels, in order to 

generate maximum profit for itself. Defendants’ efforts were essential to the success or failure of 

the enterprise. 

66. Investors understood that, on a monthly basis, the interest rate for their Gemini 

Earn investments would be revised by Genesis, reflecting Genesis’ ongoing managerial efforts to 

pay among “the highest rates in the market.”   

67. Defendants’ statements and actions, and the economic reality of the Gemini Earn 

program, have led reasonable investors to expect Genesis to undertake significant and essential 

technical, managerial, and entrepreneurial efforts on their behalf, and investors in the Gemini 

Earn program reasonably expected to profit from those efforts.   

III. Defendants Have Failed to Register their Offer and Sale of Securities Through 
Gemini Earn with the Commission 

 
68. Defendants offered and sold securities through the Gemini Earn program.  

69. Defendants have used interstate commerce to offer and sell securities through 

Gemini Earn by, among other things, engaging in general solicitation through their websites and 

other promotional materials, including social media.   

70. Defendants have never had a registration statement filed or in effect with the SEC 

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for their offers and sales of securities through the Gemini Earn program.  

71. Defendants’ public disclosures contained selective or no information about 

Genesis’ financial history, audited financial statements, management discussion and analysis of 

financial condition and results of operations, and ability to generate profits. Gemini Earn 

investors also had limited or inadequate information about Genesis’ operations, financial 

condition, liquidity, or other factors relevant in considering whether to invest in the Gemini Earn 

program. Investors also lacked full and detailed information regarding how Genesis deploys their 

crypto assets, including its exposure to volatility in crypto asset markets, the financial condition 

of Genesis’ counterparties and the amount of collateral Genesis obtained, if any, as part of its 

loans to Institutional Borrowers. In short, Gemini Earn investors lacked information that issuers 

provide under the Securities Act when they solicit public investment.   

CLAIM FOR RELIEF 
Violations of Section 5(a) and 5(c) of the Securities Act 

[15 U.S.C. §§ 77e(a) and 77e(c)] 
 
72. The SEC realleges and incorporates by reference paragraphs 1 through 71 above. 

73. By virtue of the foregoing, without a registration statement in effect as to that 

security, Defendants, directly and indirectly, (a) made use of the means and instruments of 

transportation or communications in interstate commerce or of the mails to sell securities through 

the use or medium of any prospectus or otherwise; (b) carried or caused to be carried through the 

mails or in interstate commerce, by any means or instruments of transportation, any such security 

for the purpose of sale or for delivery after sale; and (c) made use of the means and instruments 

of transportation or communication in interstate commerce or of the mails to offer to sell through 

the use or medium of a prospectus or otherwise, securities as to which no registration statement 

had been filed. 

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74. By engaging in the conduct described above, each Defendant violated, and unless 

restrained and enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act [15 

U.S.C. §§ 77e(a) and 77e(c)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I.  

Permanently enjoining Defendants, and each of their respective agents, servants, 

employees, attorneys and other persons in active concert or participation with any of them, from 

violating, directly or indirectly, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e(a) 

and 77e(c)]; 

II.  

Ordering Defendants to disgorge all ill-gotten gains obtained within the statute of 

limitations, with prejudgment interest thereon, pursuant to Sections 21(d)(3), (d)(5), and (d)(7) of 

the Exchange Act [15 U.S.C. § 78u(d)(3), (5), (7)]; 

III.  

Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the Securities Act 

[15 U.S.C. § 77t(d)]; and  

IV. 

Granting any other and further relief this Court may deem just and proper for the benefit of 

investors. 

 

 

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JURY DEMAND 

The Commission demands a trial by jury.  

 

Dated: January 12, 2023   /s/ Edward J. Reilly  
Edward J. Reilly* 
Jonathan Austin (SDNY Bar No. JA-2073) 
Ashley Sprague   
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 

         100 F Street NE 
          Washington, DC 20549 

  (202) 551-6791 (Reilly) 
          Email: [email protected] 
*Pending admission pro hac vice  
 
Of Counsel 
Stacy Bogert 
Deborah A. Tarasevich  
James P. Connor 
 

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