Gemini Filed a Reply Brief Against SEC Citing Unclear Regulations

Gemini, a cryptocurrency exchange, has filed a brief supporting a motion to dismiss the lawsuit it's facing against the United States Securities and Exchange Commission (SEC).

On August 18th, the company once again pushed back against SEC’s allegations regarding "Gemini Earn". In the filing, Gemini argued that the agency is inconsistent with its claims and fails to identify unregistered security and its sale.

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Back on January 12th, SEC accused Gemini and Genesis, a now-bankrupt financial services firm, of selling unregistered securities to retail investors using the Gemini Earn program. Since then, Genesis tried to dismiss the claims, stating the transactions were loans, not sales. 

In the filed brief, Genesis stated that since the SEC can’t decide what, in this case, is the security, it only makes the agency’s position weaker. Additionally, the SEC “has not plausibly alleged that such security was ever sold or offered for sale.”

The filing underlined the importance of defining the terms on which the lawsuit is built on and stressed the SEC's failure to identify them.

According to the brief:

These are not controversial points. They are clear on the face of the statute, and the SEC has admitted that it must allege both a security and a sale. However, the SEC has not met that burden, and its opposition avoids the question before the court.

Since the lawsuit was filed at the beginning of this year, there were several attempts to overcome it. On May 27th, Gemini tried to dismiss the lawsuit on the grounds that the Earn program itself wasn’t a security like the SEC claimed.

On top of the lawsuit, Gemini is trying to work out a deal with the Digital Currency Group (DCG), a parent company of now-defunct Genesis, to help the Earn users affected by the withdrawal restrictions since November 2022.

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