Gemini - which were established by Tyler and Cameron Winklevoss, 39, who were depicted in the 2010 film ‘The Social Network’ by Armie Hammer- and Genesis are alleged to have unlawfully sold their online currency via their joint effort Gemini Earn, say the Security Exchange Commission.
Tyler labelled the charges “disappointing” and will work towards creating a defence alongside the Genesis, a firm created by the Digital Currency Group.
Gary Gensler, the chair of the SEC said: "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.
"Doing so best protects investors. It promotes trust in markets. It's not optional. It's the law."
Earlier last week, he labelled crypto as the “Wild West” amid the billion dollar collapse of Sam Bankman-Fried’s fund FTX.
Last week, an argument broke out between the Winklevoss twins - who sued Facebook creator Mark Zuckerberg - and the CEO of Digital Currency Group, Barry Silbert over the programme, which was advertised to investors as a chance to earn up to 7.4 per cent in interest on their crypto portfolio.
After the collapse of FTX last November, Genesis stopped their 340,000 customers being able to take out their investments, telling them they did not have enough cash to support the move because of the volatile nature of the market.
Cameron accused DCG of owing $900 million to their Gemini clients and said Mr Barry of “defrauding” them.
A rep for DCG refuted this allegations, labelling them "malicious, false and defamatory attacks" and calling them a "desperate and unconstructive publicity stunt".