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    Home»News»Gemini File Motion for Dismissal of SEC Lawsuit
    News

    Gemini File Motion for Dismissal of SEC Lawsuit

    Anietie DavidBy Anietie DavidMay 30, 2023Updated:May 30, 2023No Comments2 Mins Read
    Gemini File Motion for Dismissal of SEC Lawsuit
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    Gemini, a cryptocurrency exchange, and Genesis Global Capital, a bankrupt digital asset lender, have jointly submitted a motion to dismiss a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC) against Gemini’s Earn program.

    In a document filed at the United States District Court for the Southern District of New York on May 26, Gemini and Genesis argued that the SEC lacks legal grounds to classify the Earn product as the sale of unregistered securities since it functioned as a crypto asset lending service.

    To recall, the SEC filed a complaint in January accusing Gemini and Genesis of selling unregistered securities to retail investors in the United States through the Gemini Earn program.

    The Earn program, launched in December 2020, was discontinued earlier this year when Genesis faced liquidity challenges and could no longer fulfill interest payments to clients due to the downturn in the crypto market. The status of the over $900 million owed by Genesis to hundreds of thousands of Gemini investors remains uncertain as Genesis filed for Chapter 11 bankruptcy protection in January.

    The SEC alleged that Gemini and Genesis circumvented disclosure requirements designed to safeguard investors and violated federal securities laws.

    Gemini Insists MDALA is a Commercial Agreement

    The defendants emphasized that the Master Digital Asset Loan Agreement (MDALA) associated with the Earn program should not be considered an investment contract. They pointed out that the agreement was never sold or offered for sale, was not tradable on any secondary market, did not involve the transfer of asset ownership, and did not entail lending or borrowing obligations.

    The crypto exchange and Genesis contended that the MDALA was a commercial agreement that fell outside the scope of Section 5 of the Securities Act, which pertains to the sale or offer to sell securities. In their argument before the court, the crypto entities asserted that allowing the SEC to proceed with the lawsuit would amount to disregarding the “plain meaning” of the Securities Act.

    Gemini Genesis Global Capital SEC
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    Anietie David

    Anietie has worked in the blockchain industry for three years, gaining experience in blockchain technology, cryptocurrencies, DeFi, and NFTs. As a seasoned content writer, he is passionate about creating effective content strategies for blockchain brands. In addition to content writing, he also has a strong interest in front-end development. When he's not working, he spends his time reading horror novels or playing CODM.

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