Crypto firm Gemini is electing a new chief financial officer in its fight against the SEC

diving letter:

  • Cryptocurrency exchange Gemini Trust Company, LLC has appointed Tyler Skelton as its chief financial officer as it faces regulatory scrutiny and market upheaval stemming from the high-profile collapse of fellow exchange FTX, according to a report Friday by Bloomberg.
  • The appointment comes weeks after the Securities and Exchange Commission mandated both Gemini and its partner Genesis Global Capital to sell unregistered securities through its Gemini Earn cryptocurrency lending program. The program “constitutes an offer and sale of securities under applicable law” and therefore should have been registered with the SEC, according to their complaint.
  • Genesis filed for Chapter 11 bankruptcy in early January after facing consequences related to the collapse of crypto exchange FTX, which led to it halting payouts from the Gemini Earn program. The lender listed Gemini among its top 50 lenders and owes the exchange about $765 million, according to bankruptcy filings.

Dive insight:

After the exchange, Skelton takes over the financial helm of Gemini – founded in 2015 by Cameron and Tyler Winkelvoss, the company’s president/CEO — has repeatedly made staff cuts since June, according to a report by Industry Dive sister publication Banking Dive.

Before joining the ailing crypto exchange, Skelton was CFO for small business payments servicer Till Payments for a year as of January 2022, according to his LinkedIn profile — which, as of this month, shows him as Gemini’s chief financial officer. He has also held finance positions at crypto insurance market Nayms and crypto financial services provider Bakkt, and is a graduate of payments company Fiserv, where he served as director of e-commerce finance for three years.

According to a September 2022 press release, Gemini’s former chief financial officer, Jared Shaw, left the company last fall to take a CFO position at cryptocurrency gaming platform Animoca Brands. Before joining Gemini in May 2019, Shaw was a senior manager and financial services advisor for Big Four accounting firm Ernst & Young and is also a Goldman Sachs graduate, according to his LinkedIn profile.

Gemini did not respond to requests for comment. Skelton’s hiring was confirmed to Bloomberg by a person familiar with the matter, according to their Friday report.

Genesis has loaned hundreds of millions to the FTX subsidiary, Alameda Research, according to the Wall Street Journal.

Gemini and Genesis join several other crypto firms that have attracted the attention of regulators lately; After a turbulent 2022, the industry as a whole is attracting more attention from both financial and political bodies. The Financial Accounting Standards Boards are preparing for another vote on crypto accounting standards, CFO Dive reported on Friday.

Investors in Gemini’s earn program have yet to recover their assets and related parties are still seeking a solution, according to the exchange. Gemini said in November it didn’t have enough liquidity to meet its withdrawal requests before finally ending the program this month, according to the SEC’s complaint.

At the time of the hiatus, Genesis had approximately $900 million in assets from 340,000 investors in the Gemini Earn program, according to the SEC.

“Today’s indictments build on previous actions to make it clear to the market and the investing public that crypto lending platforms and other intermediaries must comply with our well-established securities laws,” said Chairman Gary Gensler said in a statement. “This is the best way to protect investors. It promotes confidence in the markets. It’s not optional. It’s the law.”

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