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Bankrupt crypto lender Genesis to pay $21 million to settle SEC charges

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/

(Reuters) - Genesis Global Capital LLC has agreed to pay a $21 million civil fine to settle charges that it illegally sold securities through its crypto lending program without registering them, the U.S. Securities and Exchange Commission said on Tuesday.

The deal resolves January 2023 charges the SEC filed against Genesis and Gemini Trust Company LLC over their joint crypto lending program. It was one of a spate of enforcement actions the SEC has taken against large firms in the crypto sector.

Genesis, which filed for bankruptcy in January 2023, is part of Digital Currency Group (DCG). A spokesperson for DCG did not respond immediately to request for comment.

Genesis operated a lending program that raised billions of dollars' worth of crypto assets from investors, the SEC has said. It froze customer redemptions in November 2022, following the collapse of crypto exchange FTX.

Through the deal to settle the charges detailed on Tuesday, the SEC said it will not receive any of the penalty until other claims are settled by a bankruptcy court, including those from retail investors.

(Reporting by Chris Prentice; Additional reporting by Hannah Lang and Susan Heavey; Editing by Alexander Smith)