Crypto firm Genesis Global Capital agreed to pay a $21 million civil penalty to the Securities and Exchange Commission (SEC) to settle charges that the Gemini Earn investment program was an unregistered security offering.

The settlement, filed Monday in U.S. District Court for the Southern District of New York, said the SEC penalty will be treated as an unsecured claim in Genesis’s bankruptcy case. The agency said in a press release it will not receive any portion of the penalty until the company settles its bankruptcy claims.

The details: The SEC sued Genesis in January 2023, alleging the company and Gemini raised “billions of dollars’ worth of crypto assets from hundreds of thousands of investors” with Gemini Earn. The program allegedly constituted the offering and sale of a security but was not registered with the SEC, a violation of federal securities law.

Genesis is a subsidiary of Digital Currency Group; Gemini is owned by billionaire twins Cameron and Tyler Winklevoss.

In November 2022, Genesis announced it would not allow Gemini Earn investors to withdraw their crypto assets “because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market,” the SEC said. At the time, Genesis held approximately $900 million in crypto assets from 340,000 Gemini Earn investors.

The timing of the crypto market volatility cited by Genesis was connected to the collapse of crypto trading platform FTX.

Gemini was fined $37 million by the New York State Department of Financial Services in February for compliance failures related to the Gemini Earn program.

Company response: In a blog update, Gemini Earn said U.S. Bankruptcy Court approved a settlement in principal to return 100 percent of all digital assets invested in Gemini Earn back to investors. The blog post made no mention of the SEC settlement with Genesis.

The SEC’s related case against Gemini is ongoing.

Genesis did not respond to a request for comment.