The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Gemini and Genesis for allegedly failing to properly register their cryptocurrency lending program, Earn, as a securities offering.

Additionally, Bulgarian prosecutors have launched an investigation into alleged illegal activities by cryptocurrency lender, Nexo, resulting in the raid of over 15 sites in the capital city of Sofia.

On the technical front, Polygon Labs has announced plans to proceed with a hard fork for the Polygon network in the upcoming week. The hard fork aims to mitigate network gas fee spikes and tackle chain reorganization issues.

Top stories in the Crypto Roundup today:

• SEC Sues Gemini and Genesis Over Crypto Lending Program
• Bulgaria Raids Crypto Lender Nexo Amid Ongoing Probe
• Polygon to Undergo Hard Fork
• Crypto Market Movers – GALA, FET, APT

SEC Sues Gemini and Genesis Over Crypto Lending Program

The U.S. Securities and Exchange Commission (SEC) has sued digital currency trading platform Gemini and cryptocurrency lender Genesis, stating that Gemini’s cryptocurrency lending program Earn wasn’t properly registered as a securities offering.

The program, as of October 2022, offered net interest rates to investors as high as 8.05%, according to the SEC. In February 2021, Gemini started allowing users to loan their digital assets to Genesis in exchange for interest.

The SEC said that Gemini facilitated the transaction, taking agent fees as high as 4.29% that totaled roughly $2.7 million in the three months to March 2022. In November, Genesis halted withdrawals over insufficient liquidity, affecting 340,000 Gemini Earn investors with about $900 million lent out.

Gemini shut down its Earn offering earlier this month, but retail investors are still unable to withdraw their funds. The SEC said they “have suffered significant harm,” with SEC Chair Gary Gensler saying in a statement:

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.”

Gensler said doing so “best protects investors and “promotes trust in markets.” Gemini co-founder Tyler Winklevoss called the SEC’s move “counterproductive,” noting that it does “nothing to further our efforts and help Earn users get their assets back.

Bulgaria Raids Crypto Lender Nexo Amid Ongoing Probe

Bulgarian prosecutors have launched an investigation into alleged illegal activities conducted by popular cryptocurrency lender Nexo, raiding more than 15 sites in the country’s capital Sofia as a result.

The move comes after Nexo said in December it would phase out its products and services in the U.S. over clashes with local regulators. Siyka Mileva, a spokeswoman for the prosecutors' office, said:

"In Sofia, active steps are being carried out as part of a pre-trial investigation aimed at neutralising an illegal criminal activity of crypto lender Nexo.”

Mileva added that it has “been established that the main organisers of the international platform are Bulgarian citizens and the main activities are from Bulgarian territory.” The raids were conducted with over 300 investigators, police officers and security officers.

Prosecutors are investigating the alleged setting up of an organized crime group, tax crimes, money laundering, computer fraud, and banking activity with a license. Nexo has said authorities were at one of its offices, but added it “only has operational expense-related functions - payroll, customer support, back office."

Polygon to Undergo Hard Fork

Polygon Labs is set to move forward with plans to hard fork the Polygon network early next week, after a heated community debate. The hard fork is meant to prevent network gas fee spikes and address chain reorganization.

Hard forks aren’t backwards-compatible and require all node operators on the network to update to the latest software at a specific time. Polygon is a Layer-2 scaling solution for Ethereum that provides users with faster transactions and lower costs as a parallel blockchain running alongside the main Ethereum network.

It has suffered congestion in the past. The gas fee spike reduction will be achieved by doubling the value of the “BaseFeeChangeDenominator,” to help “smooth out the increase/decrease rate in baseFee for when the gas exceeds or falls below the target gas limits in a block.”

Reorgs, caused by network errors or attacks, can result in the temporary split of a blockchain network and can lead to lost or duplicate transactions. One suggested way to reduce them is by essentially reducing the amount of time it takes for a transaction to be confirmed.

Crypto Market Movers – GALA, FET, APT

Several tokens are leading the charge in the last 7-day period. Some of these are well-known cryptocurrencies with more liquid trading pairs, so we’ll be focusing on these over low-cap cryptos that may have higher percentage changes

Gala (GALA) - Gala Games is a blockchain gaming ecosystem that offers numerous different games built on the Gala Network, which uses its native token to identify in-game assets that players own. The GALA token is the digital utility token of the Gala Games ecosystem.

Fetch.AI (FET) - Fetch.ai is delivering AI to the crypto economy. Autonomous Economic Agents, powered by artificial intelligence, can provide automation to decentralised finance that can serve the needs of a single user or aggregate millions of data points for on-chain oracles.

Aptos (APT) - Aptos is a Layer 1 Proof-of-Stake (PoS) blockchain that employs a novel smart contract programming language called Move, a Rust-based programming language that was independently developed by Meta (formerly Facebook)’s Diem blockchain engineers, envisioning a blockchain that brings mainstream adoption to web3 and empowers an ecosystem of DApps to solve real-world user problems.

State of the Crypto by Top Tier Exchange Volume

Build your project with CoinDesk Data

Terms | Privacy

13 Charles II St, SW1Y 4QU

London, UK

This email may include advertisements by third parties. None of the advertised or promoted products and services have been verified or approved by us and this email is not any endorsement by us of the third party or of their products or services.