Gemini and Genesis Push to Dismiss SEC's Allegations Regarding 'Gemini Earn'

In a move to counter regulatory pressure, crypto exchange Gemini and crypto lender Genesis Global Capital have submitted a joint request for the dismissal of a lawsuit filed by the Securities and Exchange Commission (SEC).

The lawsuit asserts that "Gemini Earn" violated securities laws by offering unregistered securities. It is worth noting that Gemini's "Earn" product lent cryptocurrencies, such as Bitcoin (BTC), to Genesis.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

What is a Crypto Wallet? (Explained With Animation)

SUBSCRIBE

ON YOUTUBE

In their legal submissions, both companies argue that the "Gemini Earn" should not be considered a security.

Crypto lender asserted that the transactions were basically loans and asked the court to either dismiss the claim or negate the SEC's request for a permanent injunction and disgorgement.

Jack Baughman, a founding partner of JFB Legal representing Gemini, expressed his views on the SEC’s case via Twitter. He suggested that the SEC's case is complicating the process of retrieving assets from the Genesis bankruptcy to compensate "Earn" users and isn't helping to expedite the return of locked assets.

In the aftermath of the SEC's lawsuit in January, Genesis filed for bankruptcy. Consequently, since mid-November 2022, "Earn" users started experiencing withdrawal limitations.

In response, Gemini submitted a comprehensive claim on May 22nd, seeking to recover over $1.1 billion in assets for approximately 232,000 "Earn" users.

Currently, Gemini and the parent company of Genesis, the Digital Currency Group (DCG), are in mediated discussions to devise a restructuring and settlement agreement.

With ongoing negotiations and restructuring plans, the companies aim to rectify the situation for affected users.