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Crypto exchange Gemini and bankrupt digital asset lender Genesis Global Capital have jointly filed a motion with the US Securities and Exchange Commission (SEC) to dismiss a lawsuit against the former’s Earn program.
according to a document In a filing on Friday, May 26 in the United States District Court for the Southern District of New York, Gemini and Genesis assert that the SEC has no basis in law to describe the acquired product as the sale of unregistered securities, Because it was a crypto asset lending service.
Gemini and Genesis ask court to dismiss SEC lawsuit
Recall that the SEC filed a complaint against Gemini and Genesis in January for allegedly selling unregistered securities to retail investors in the US through the Gemini Earn program.
The program, launched in December 2020, was shut down earlier this year after Genesis froze withdrawals and could no longer pay interest to Gemini customers due to insufficient liquid assets stemming from the crypto market meltdown . The fate of thousands of Gemini investors who were owed more than $900 million by Genesis, which filed for Chapter 11 bankruptcy protection in January, is unknown.
The SEC alleged that Gemini and Genesis circumvented disclosure requirements designed to protect investors and violated federal securities laws.
“Despite the clear nature of the MDLA, and its limitations on how it can be used, the SEC does not want the earnout program to do something it does not: the sale of unregistered securities. While the SEC suggests that the application of federal securities laws here Clearly, the complaint is a frivolous attempt to expand its scope beyond any reasonable reading of the relevant statutory language,” Gemini and Genesis said.
a commercial agreement, not an investment contract
Defendants further assert that the Master Digital Asset Loan Agreement (MDALA) for the Gemini Earn program was not an investment contract. The agreement was never sold or offered for sale, could not be traded in any secondary market, did not involve the transfer of title to any property, and was not required to lend or borrow money to anyone. .
Gemini and Genesis argued that the MDALA was a commercial agreement not covered by Section 5 of the Securities Act, which requires the sale or offer for sale of a security.
Crypto entities told the court that allowing the SEC to pursue the matter would mean ignoring the “plain meaning” of the Securities Act.
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Crypto exchange Gemini and bankrupt digital asset lender Genesis Global Capital have jointly filed a motion with the US Securities and Exchange Commission (SEC) to dismiss a lawsuit against the former’s Earn program.
according to a document In a filing on Friday, May 26 in the United States District Court for the Southern District of New York, Gemini and Genesis assert that the SEC has no basis in law to describe the acquired product as the sale of unregistered securities, Because it was a crypto asset lending service.
Gemini and Genesis ask court to dismiss SEC lawsuit
Recall that the SEC filed a complaint against Gemini and Genesis in January for allegedly selling unregistered securities to retail investors in the US through the Gemini Earn program.
The program, launched in December 2020, was shut down earlier this year after Genesis froze withdrawals and could no longer pay interest to Gemini customers due to insufficient liquid assets stemming from the crypto market meltdown . The fate of thousands of Gemini investors who were owed more than $900 million by Genesis, which filed for Chapter 11 bankruptcy protection in January, is unknown.
The SEC alleged that Gemini and Genesis circumvented disclosure requirements designed to protect investors and violated federal securities laws.
“Despite the clear nature of the MDLA, and its limitations on how it can be used, the SEC does not want the earnout program to do something it does not: the sale of unregistered securities. While the SEC suggests that the application of federal securities laws here Clearly, the complaint is a frivolous attempt to expand its scope beyond any reasonable reading of the relevant statutory language,” Gemini and Genesis said.
a commercial agreement, not an investment contract
Defendants further assert that the Master Digital Asset Loan Agreement (MDALA) for the Gemini Earn program was not an investment contract. The agreement was never sold or offered for sale, could not be traded in any secondary market, did not involve the transfer of title to any property, and was not required to lend or borrow money to anyone. .
Gemini and Genesis argued that the MDALA was a commercial agreement not covered by Section 5 of the Securities Act, which requires the sale or offer for sale of a security.
Crypto entities told the court that allowing the SEC to pursue the matter would mean ignoring the “plain meaning” of the Securities Act.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
