According to recent reports, Gemini, a cryptocurrency exchange, and Genesis Global Capital, have joined forces to request that a Securities and Exchange Commission (SEC) case be dismissed.
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Gemini vs. US Regulators
As per the lawsuit, “Gemini Earn” breached securities regulations by providing unregistered securities. Gemini Earn allowed users to lend crypto assets like Bitcoin to Genesis for a fee of up to 4.29%.
In a blog update directed to Earn users, Gemini, which acknowledged that it serves as a transfer agent for Earn, criticized the SEC action as “ill-conceived.”
Not a Security
In addition, the legal documents filed by the firms state that Gemini Earn is not a security. Genesis maintained that the deals amounted to loans and asked the judge to throw out the case or, at least, to overturn the SEC’s demands for a repayment and permanent injunction.
Moreover, the complaint said that Gemini, rather than Genesis, was in charge of the Earn program’s customer service.
Gemini and DCG in Talks of a Settlement
The parent organization of Gemini and Genesis, the Digital Currency Group (DCG), is in mediation talks to create a reorganization and settlement agreement. A tentative agreement since February remains unfinished, and earlier this month, DCG forgot to pay Genesis $630 million on a loan. In order to recover the $900 million owed to the exchange’s clients, it has been claimed that the firm plans to file a lawsuit against Digital Capital Group (DCG) and its CEO, Barry Silbert.
Earn Program has been Ended
Users of Earn have been subject to withdrawal restrictions since mid-November 2022 as a result of Genesis filing for bankruptcy after being sued by the SEC in January. Gemini responded by submitting a thorough claim on May 22 with the goal of recovering nearly $1.1 billion in assets for 232,000 Earn members.
Winklevoss stated earlier this year that Gemini had finally ended its Earn programme. A founding partner of JFB Legal, which represents the crypto exchange, Jack Baughman, said in a tweet that the SEC’s litigation is just making it more difficult and challenging to recover assets from the Genesis bankruptcy in order to make Earn users whole.
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