Currency Exchange Gemini Seeks to Have SEC Lawsuit Dismissed
In a recent update, the cryptocurrency exchange Gemini, run by the Winklevoss twins, filed a motion to dismiss the SEC’s securities violation lawsuit.
Gemini Trust Co filed the request in Manhattan federal court on May 26 in response to a January 12 lawsuit by the US Securities and Exchanges Commission.
The litigation was against the exchange and a Digital Currency Group (DCG) subsidiary, Genesis Global Capital.
In detail, the SEC alleged that Gemini’s yield product, Earn, which allows investors to loan their crypto to Genesis in return for interest, is an unregistered security.
Also, the SEC said that Gemini and Genesis Global sold unregistered securities to retail investors through the Gemini Earn lending program.
The watchdog alleged that Genesis and Gemini raised billions of dollars in crypto assets from hundreds of thousands of investors through this product, deducting agent fees as high as 4.29 percent.
The SEC further mentioned that Genesis held $900 million in investor assets from 340,000 Gemini Earn investors before halting withdrawals and filing for bankruptcy in late January 2023.
In addition, the regulator accused the firms of bypassing disclosure requirements designed to protect investors.
In the May 26 filing, Gemini noted that it did not offer the loan agreements among itself, Genesis, and customers on secondary markets.
Again, the crypto exchange maintained no transfer of asset titles, and therefore the offering does not qualify as securities.
Gemini said in the filing:
“Accordingly, there was no requirement that any party register it with the SEC.”
Reuters reported that the SEC declined to comment on the issue, and the lawyers did not respond immediately but later said they would pursue a dismissal.
In a May 26
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