Gemini, an American cryptocurrency exchange, has taken a stand against the United States Securities and Exchange Commission (SEC), deeming the lawsuit brought forth by the regulator as “absurd.”
Gemini Pushes Back Against SEC Lawsuit
In the ongoing legal battle between Gemini Exchange and the US SEC, co-founders Cameron Winklevoss and Tyler Winklevoss have contested the validity of the SEC’s case by submitting a comprehensive brief to oppose the SEC’s claims on the Gemini Earn program.
In the filing, Gemini stated that the SEC had failed to establish a clear definition of what the regulatory body regards as securities. The exchange also highlighted the absence of well-defined requirements for violating regulatory laws. As a result, the lack of specification in the SEC’s argument hampers the exchange’s ability to respond properly to the allegations put forward.
In the Judicial presentation, the exchange urged the court to ignore the “convoluted analysis” provided by the SEC. The exchange has instead advocated for direct questions which would determine if the cryptocurrency in question qualifies as a security.
Gemini has also stated that the SEC should provide an identification of the unregistered security and information on the specific sale, highlighting that treating all cryptocurrencies as unregistered security is prejudiced.
The company’s lawyer, Jack Baughman also publicly refuted the SEC’s claims in a Twitter post, saying:
The SEC is floundering. They can’t even decide what the security is. On the one hand, they claim that the Loan Agreement was a security. On the other hand, they claim that the entire Gemini Earn program was itself a security — an argument absurd on its face.
GUSD market cap at $361 million | Source: GUSD Market Capitalization on Tradingview.com
Background On The SEC Lawsuit
Earlier this year, on January 13, the US SEC filed a lawsuit against Gemini and Genesis, a crypto lender affiliated with Gemini Trust Company. According to the SEC, Genesis loaned the exchange’s users unregistered securities through the Gemini Earn program, allowing the exchange and Genesis to accumulate billions of dollars worth of crypto assets from thousands of investors.
At the beginning of February 2021, Genesis and Gemini initiated a partnership that would offer the Gemini Earn program to retail investors allowing them to loan their crypto assets to Genesis, while the exchange acts as a middleman. Genesis would then invest the crypto assets, and pay users in interest.
The SEC alleged that the company, alongside Genesis, violated federal laws via the Gemini Earn program by not registering its offerings and sales with the Commission. The lawsuit was received with an unfavorable response from the exchange’s legal team, which resulted in the dismissal motion submitted on August 18.
Featured image from Unsplash, chart from Tradingview.com