Genesis Global Trading, a major crypto trading business in the US, has decided to stop operating its over-the-counter (OTC) trading platform. This decision comes in response to charges from the Securities and Exchange Commission (SEC), adding to the challenges faced by the crypto industry.
Genesis Global Trading, a subsidiary of Digital Currency Group (DCG), has been a significant player in the crypto market, offering various trading services. However, the company’s financial difficulties started when FTX and its affiliates went bankrupt, directly impacting Genesis’s operations. In January, Genesis Global Holdco and its lending business subsidiaries filed for bankruptcy.
The SEC’s complaint focuses on the Gemini Earn program, in which Genesis played a significant role. This program allowed retail investors to lend out cryptocurrency and receive fixed returns. The SEC alleges that both Genesis and Gemini raised billions of dollars worth of crypto assets without providing necessary information to investors, violating securities laws.
In response to these charges, Genesis Global Trading has decided to stop its digital asset spot trading through Genesis Global Trading Inc. (GGT). However, GGC International Limited, another trading-focused segment of the company, will continue to offer spot and derivative trading services. This strategic move aims to ensure business continuity while dealing with the legal challenges.
By September 30th, Genesis Global Trading will close all remaining open accounts to smoothly discontinue services with regulatory authorities. The company is actively working with these authorities to address the situation.
The closure of Genesis Global Trading’s OTC platform raises concerns among traders and investors who rely on this service. With the deadline approaching quickly, all trades must be settled by September 21st, giving clients limited time to adjust to the changing landscape.
The SEC’s crackdown on unregistered securities reflects an effort to establish clear rules and guidelines for the crypto industry. Companies that offer unregistered securities not only face legal implications but also undermine investor trust. Compliance with regulatory frameworks will be increasingly important for sustained growth and credibility.
Genesis Global Trading cites “unprecedented market turmoil” as the reason for the lack of liquidity to cover redemption requests. This financial strain, combined with regulatory scrutiny, has led the company to make tough decisions, including downsizing its workforce. Recently, Genesis laid off 30% of its staff across different departments, highlighting the challenges faced by the company.
It’s worth noting that DCG, the parent company of Genesis Global Trading, also owns CoinDesk, a leading news outlet covering the crypto industry. Through this ownership, DCG has established a strong presence in the crypto ecosystem, with CoinDesk providing valuable insights and analysis to the market.
The outcome of the legal proceedings against Genesis and Gemini will not only affect the future of Genesis Global Trading but also shape the broader landscape of the crypto industry. As the company works closely with regulatory authorities to smoothly discontinue services, the future of crypto trading and regulation hangs in the balance, leaving investors and industry participants eagerly awaiting the outcome of these proceedings.