Gemini Seeks to Dismiss SEC’s Lawsuit Against Earn Product

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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. 

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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