Gemini, crypto exchange accused by SEC
The Winklevoss twins’ crypto exchange, Gemini, has been accused by the SEC of offering “unregistered securities.” Gary Gensler, the chairman of the SEC, stepped up scrutiny of what he called the “wild west” of cryptocurrencies.
Gemini and the SEC: the US government’s charges against the crypto exchange
The nagging “unregistered security” by the US Securities and Exchange Commission (SEC) against crypto exchanges has also involved that of the Winklevoss twins, The twins.
As early as last January, SEC reportedly the blame the disastrous “Gemini Earn” program for being an unregistered security offering. Here’s how the SEC cited it:
“Through this unregistered offering, Genesis and Gemini raised billions of dollars worth of crypto assets from hundreds of thousands of investors. Investigations into other securities law violations and into other entities and individuals linked to the alleged misconduct are ongoing.”
Essentially, new evidence suggests that programs such as staking has become a means for cryptocurrency companies to inflate the value of their assets using consumer funds.
All this general investigation of crypto exchanges by the SEC came after the collapse of FTX in Novemberwhich froze billions of dollars worth of customer deposits.
Recently, in a roundup of tweets, Tyler Winklevossco-founder of Gemini, wanted to emphasize the position of the crypto firm Gemini Trust Company LLC.
2/ Gemini Trust Company, LLC, is a New York trust company and has been a trustee and qualified trustee under the New York Banking Law since 2015. This will continue to be the case under any new SEC rule that becomes effective.
— Tyler Winklevoss (@tyler) 17 February 2023
Gemini and the SEC: Clearing Up Confusion Over Crypto Regulation
Winklevoss’s tweet refers more to crypto custody than to the Earn program. But his statements also say that investor protection is important, but that the public regulatory process for crypto and securities to be registered is unclear.
What the SEC is actually doing is targeting all crypto offerings from cryptocurrency exchanges by deeming them non-compliant with the law.
The confusion arises precisely over that The SEC wants to define a cryptocurrency as a security or financial instrument traded for profit. To do that, that would classify the asset according to the four prongs of the Howey test. This would mean that the crypto asset would become like gold or an ETF.
However, all this is not yet a reality. Not only that, their development with programs such as staking or initial coin offerings creating more confusion on the subject. In fact, if cryptoassets were securities, then these programs are must be classified as a security offer and therefore registered, just like an IPO of a share.
Crypto exchange retaliates on Twitter
In recent weeks, all the crypto exchanges have been in full swing on Twitter, commenting on the SEC’s latest statements.
Kraken had to shut down its betting service after the SEC fined it $30 million. Jesse Powell, CEO of Kraken, mournfully commented on SEC Chairman Gary Gensler’s video, saying that those offering wagering programs to be compliant should also provide full, fair and truthful information.
Although no charges have yet been broughtCoinbase’s Chief Legal Officer, Paul Grewalalso commented that they would like to defend the betting service in court if the SEC charges them.
Not only staking, even the issuance of stablecoins appears to be under scrutiny by the authorities. Actual, Paxos had to block issuance of new Binance USD (BUSD) by order of NYDFSwhich reported concerns about stablecoin compliance.
By contrast, Binance, without much comment, instead announced that it had minted 50 million units of the TrueUSD stablecoinwhich surprises the community since there were no reported plans to do so.
