On January 31, 2024, Genesis Global Capital, LLC (“GGC”) announced that it has entered into a settlement agreement with the U.S. Securities and Exchange Commission (“SEC”).  The agreement relates to a lawsuit filed by the SEC against Gemini Trust Company, LLC and GGC in January 2023, alleging an unregistered securities offering under Section 5 of the Securities Act related to the Gemini Earn Program, which terminated in November 2022.  

Under the agreement, without admitting or denying the settled claims, GGC will agree to give the SEC a $21 million allowed unsecured claim against GGC in its Chapter 11 bankruptcy case.  The SEC’s claim will be subordinated to all other allowed administrative expense, secured, priority, and general unsecured claims.  That is, the SEC has agreed not to receive payment under the Settlement Agreement until after all general unsecured creditors are paid in full.  

The settlement agreement maximizes value for creditors by providing that they will be paid before the SEC, while allowing GGC to avoid further costs of continued litigation against the SEC and preserve assets for creditor recovery.    

‍