Gemini and Genesis have asked a judge to dismiss an SEC lawsuit regarding the Earn product, according to developments in May 26th.
Genesis says Earn was not a security
Jack Baughman, Gemini Attorney wrote:
“The SEC claims that the contract creating the Earn software was itself a security. Even if that were true…the SEC would have to show that the contract was sold. That never happened.”
Gemini offered the Earn Program in partnership with Genesis Global Capital. This allowed users to earn interest on their crypto deposits as the service providers reinvested those assets.
Gemini said in its latest filings that the offer was “nothing more than a lending arrangement.” Although the company raised many points, its main argument centered on the fact that the contracts were not sold on a secondary market.
As a result, she said, the lending agreements she signed up for did not constitute securities. She asked the court to “dismiss the complaint due to bias.”
Baughman noted that Genesis has made a similar motion to dismiss the case and said Gemini is “happy to join this argument.”
Earning stopped in November
Genesis forced Earn to halt withdrawals in November 2022. Gemini then shut down the service permanently on January 3. 10, 2023.
The Securities and Exchange Commission filed charges against Gemini and Genesis on January 3rd. 12, and alleged at the time that the companies offered unregistered securities and bypassed disclosure requirements.
In addition, Genesis’ lending arm filed for bankruptcy on January 19, 2023. This has consistently affected Gemini’s ability to obtain money owed to former Earn users. Recently, Gemini said that Genesis’ parent company missed out on a $630 million payment.
Baughman acknowledged these issues by noting that the Genesis bankruptcy is “dragging”. He said the SEC case would make it more difficult to compensate users.
Earned users owed up to $900 million in January.
Gemini and Genesis seeking to dismiss SEC lawsuit over defunct Earn product appeared first on CryptoSlate.