Genesis and Gemini File for Dismissal of SEC's Earn Program Lawsuit – Here's the Latest
Gemini, a cryptocurrency exchange, and Genesis Global Capital, a bankrupt cryptocurrency lender, have filed a petition to dismiss the SEC action linked to their joint venture product, Gemini Earn.
The SEC lawsuit charges the firms with offering yield-bearing instruments to their customers and that, as such, these products are securities offered for sale without the requisite registration with the relevant authority.
In its court documents, Gemini and Genesis contend that Gemini Earn is not a security.
The firms argue that the transactions effectively amounted to loans. They ask the court to dismiss the complaint or to overturn the SEC's requests for a disgorgement and permanent injunction.
In a post directed at Earn users, Gemini criticized the SEC case as being "ill-conceived," clarifying that Gemini, not Genesis, was responsible for the Earn program's customer-facing aspects.
Due to Genesis' bankruptcy filing following the SEC's lawsuit in January, withdrawal rights for Earn users were restricted during mid-November 2022.
Gemini responded by submitting a claim to seek the recovery from Genesis of about $1.1 billion in assets for 232,000 Earn users.
To establish a reorganization and settlement agreement, Gemini and Genesis' parent firm, Digital Currency Group (DCG) are negotiating through a mediator.
Further, Gemini and other creditors are working together on an "amended plan of reorganization" to ensure the best outcome for Earn users.
This is despite the fact that a preliminary agreement from February has not been finalized yet.
Representing Gemini, Jack Baughman, founding partner of JFB Legal, criticized the SEC's case, claiming that it made it more difficult to compensate Earn users and made it harder to recover assets
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