The Securities and Exchange Commission charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors.

The United States Securities and Exchange Commission (SEC) said it has charged Genesis Global Capital LLC and Gemini Trust Company LLC with illegally selling securities to hundreds of thousands of investors through their crypto lending program.

Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, the SEC said on Thursday. Beginning in February 2021, they raised billions of dollars worth of crypto assets from investors, the SEC said.

The firms violated securities laws through the offer and sale of crypto assets through their Gemini Earn product, the SEC said.

Gemini and Genesis did not immediately respond to a request for comment.

In November 2022, Genesis told investors they could not withdraw their crypto assets as volatility in the crypto markets prompted a liquidity crunch. At the time, Genesis had about $900m in assets from 340,000 Gemini Earn investors. The investors have been unable to withdraw their assets, the regulator said.

Investigations into other, related violations are ongoing, the agency said.

In February 2022, a subsidiary of rival crypto firm BlockFi Inc agreed to pay $100m to the SEC and 32 states to settle charges related to their offering of a similar interest-bearing product.

Gemini and other Genesis creditors have been agitating for a solution to avoid a situation similar to FTX’s rapid descent into bankruptcy. Genesis owes creditors more than $3bn, according to a person familiar with the matter.

Gemini co-founder Cameron Winklevoss publicly called for the removal of DCG Chief Executive Barry Silbert on Tuesday, accusing him of defrauding creditors and engaging in “bad faith stall tactics.” DCG has called Winklevoss’s allegations false and defamatory.