Gemini, a US cryptocurrency exchange, has taken a stand against the US Securities and Exchange Commission (SEC), deeming the lawsuit filed by the regulator “absurd”.
Gemini opposes SEC lawsuit
In the ongoing legal battle between Gemini Exchange and the US SEC, co-founders Cameron Winklevoss and Tyler Winklevoss challenged the validity of the SEC’s case by filing an extensive briefing to oppose the SEC’s claims against the Gemini Earn program.
In the submission, Gemini stated that the SEC had failed to establish a clear definition of what the regulatory body considers securities. The exchange also highlighted the lack of well-defined requirements for violating regulatory laws. As a result, the lack of specification in the SEC’s argument hinders the exchange’s ability to properly respond to the allegations.
In the court presentation, the exchange urged the court to ignore the SEC’s “convoluted analysis.” The exchange has instead advocated direct questions that would determine whether the cryptocurrency in question qualifies as a security.
Gemini has also stated that the SEC must provide an identification of the unregistered security and information about the specific sale, highlighting that it is biased to treat all cryptocurrencies as unregistered security.
The company’s attorney, Jack Baughman, also publicly refuted the SEC’s claims in a Twitter messagesaying:
The SEC is reeling. They can’t even decide what the security is. On the one hand, they argue that the loan agreement was collateral. On the other hand, they argue that the entire Gemini Earn program itself was a security – an argument that was absurd on the face of it.
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 collect billions of dollars in crypto assets from thousands of investors.
In early February 2021, Genesis and Gemini entered into a partnership that would offer the Gemini Earn program to private investors, allowing them to lend their crypto assets to Genesis, while the exchange acts as an intermediary. Genesis would then invest the crypto assets and pay users interest.
The second supposedly that, in addition to Genesis, the company violated federal laws through the Gemini Earn program by failing to register its offerings and sales with the Commission. The lawsuit was met with an unfavorable response from the exchange’s legal team, resulting in the dismissal proposal being filed on August 18.
Featured image of Unsplash, chart from Tradingview.com