Gemini, the cryptocurrency exchange founded by the twins of billionaire Tyler and Cameron Winklevoss, seems to be taking action against the US securities regulator. Here are the details…
Cryptocurrency exchange filed for rejection against SEC
Cryptocurrency exchange Gemini Trust Co. and bankrupt lender Genesis Global Capital jointly filed to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The lawsuit alleges that Earn products violated securities regulations by offering unregistered securities. In their legal filings, the companies argued that Earn products, which facilitate lending coins for returns, should not be classified as a security. Genesis also argued that transactions are essentially credit.
He asked the court to dismiss the complaint or, alternatively, reject the SEC’s requests for a permanent injunction and “disgorgement.” In addition, the claim stated that Gemini, not Genesis, was responsible for the customer-facing aspects of the Earn program. Claiming to play a role as a transfer agent for Earn, Gemini criticized the SEC case as “badly designed” in a blog update for Earn users.
What had happened?
As we reported on Cryptokoin.com, Genesis’s filing for bankruptcy following the SEC’s filing in January has led Earn users to face withdrawal restrictions since mid-November. In response, Gemini filed a sweeping request Monday, May 22, aimed at recovering over $1.1 billion in assets for the benefit of 232,000 Earn users.
Gemini, Genesis and its parent company Digital Currency Group; this month it is holding mediation talks to reach a restructuring and reconciliation agreement. A preliminary agreement made in February has not been finalized yet. Also earlier this month, DCG missed a $630 million loan payment to Genesis. During this month, Gemini, Genesis and its parent company Digital Currency Group (DCG) engaged in mediation talks to reach a restructuring and reconciliation agreement. Although a preliminary agreement was proposed in February, it was not formally finalized.
At the same time, Gemini and other creditors are collaborating on a different “restructuring plan” that can be pursued independently if the mediation process fails. The goal is to provide an optimal result for Earn users of the exchange. Jack Baughman, co-founder of JFB Legal, who was responsible for the case, said in a tweet that the SEC’s lawsuit made it more difficult and complex to recover assets from the Genesis bankruptcy and unite Earn users.
1/ I and the @JFBLegal team are proud to represent @Gemini. Today we filed our motion to dismiss the @SEC’s ill-conceived lawsuit against Gemini and Genesis relating to the Earn program.
— Jack Baughman (@JackBaughman27) May 26, 2023
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