- Following Coinbase and Binance, Gemini has also taken steps to respond to a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC).
- In an effort to deny SEC’s claims, Gemini has presented its arguments with a summary submitted to the presiding judge. The crypto exchange argues that the SEC hasn’t presented a clear case.
- Gemini asserts that the SEC should have first identified an unregistered security and then determined its sale. According to Gemini, the SEC hasn’t done this.
Gemini presented her arguments in response to a lawsuit filed by the U.S. Securities and Exchange Commission, and says the SEC has failed to provide clear evidence.
Gemini Responds to the SEC Lawsuit
After Coinbase and Binance, Gemini has also taken steps to respond to a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC). The SEC claims that Gemini’s service called “Gemini Earn” violates securities regulations by offering unregistered securities, providing opportunities to lend digital assets like Bitcoin to Genesis.
In an effort to deny SEC’s claims, Gemini has presented its arguments with a summary submitted to the presiding judge. The crypto exchange argues that the SEC hasn’t presented a clear case. Like Coinbase, they want the lawsuit dismissed due to the fact that the SEC hasn’t provided a valid classification of what falls under the term “security.” Treating everything as securities is uncertain and unwarranted.
Gemini’s counter-application stems from the fact that the SEC should have asked clear questions to determine the security. These questions should include when the security was sold, who the buyer and seller were, and the offered price. Gemini asserts that the SEC should have first identified an unregistered security and then determined its sale. According to Gemini, the SEC hasn’t done this.
Lawyers Argue that the SEC is Struggling
According to Gemini’s lawyers, the SEC’s two theories of classifying the Gemini Earn program as a security as a whole and evaluating the Loan Agreement as a security are misleading and deemed “absurd.”
In response to the recent filing, Jack Baughman has challenged the SEC’s move and indicated their inability to provide a valid argument against the exchange, highlighting the risk of losing the case. The crucial point he underscores is that the regulator can’t even determine a problematic security.
Baughman expressed doubts about the broad interpretation of the term “sale,” arguing that Gemini and Genesis based their assertion that they “sold” their commitments to make interest payments in crypto assets. Baughman rejected this concept and emphasized the difference between sale and credit.
Notably, Baughman has already pointed out, as he did in prior court filings, that transactions in the Gemini Earn program resemble more of a credit and don’t violate securities laws. Without clear rules and regulations, the SEC seems uncertain and inconsistent in its arguments, weakening its stance in the case.
Another case is ongoing concurrently. Genesis, another company in the SEC case, is facing issues as well. Digital Currency Group (DCG), the parent company of Genesis, is seeking to have Gemini removed from the lawsuit. Gemini argues that DCG didn’t provide them with accurate information about Genesis’ financial status.
