Bankrupt firm Genesis Global Holdco and its affiliates said they had settled with the United States Securities and Exchange Commission (SEC) for $21 million.

In a Jan. 31 filing in U.S. Bankruptcy Court for the Southern District of New York, Genesis debtors proposed scheduling a hearing on Feb. 14 to enter a motion recognizing a deal between the firm and the SEC. According to the debtors, the SEC will receive $21 million in exchange for settling its civil lawsuit against Genesis over the “unregistered offer and sale of securities” through the Gemini Earn program.

“The Settlement Agreement is the product of extensive negotiations between the SEC and GGC,” said the filing. “The proposed settlement will, among other benefits to the Debtors’ estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC.”

Source: Kroll

The settlement would resolve an SEC lawsuit against Genesis and Gemini filed in January 2023. The commission’s case focused on the two firms’ actions between February 2021 and November 2022, alleging they violated U.S. securities laws through the crypto lending program.

Genesis suspended withdrawals on its platform in November 2022 and filed for bankruptcy in January 2023. The SEC’s lawsuit and Genesis’ bankruptcy filing led to several legal actions between Gemini, Genesis, and Genesis’ parent company Digital Currency Group and its CEO Barry Silbert.

Related: Genesis strikes repayment deal with parent firm DCG to end $620M lawsuit

The announcement settlement was the latest from the SEC amid ongoing lawsuits between the financial regulator and crypto firms with operations in the United States, including Ripple, Binance, Coinbase, and Kraken. In August 2023, the SEC announced a $24-million settlement for its case against Bittrex and its former CEO William Shihara, for operating an unregistered exchange.

On Jan. 12, Genesis Global Trading — a separate entity from Genesis Global Capital not involved in the Gemini Earn program — agreed to pay an $8-million penalty to the New York Department of Financial Services following an investigation revealing “significant failings” in the firm’s Anti-Money Laundering and cybersecurity programs. The company agreed to cease operations in New York and surrender its BitLicense as part of the deal.

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