Gemini Responds to SEC Lawsuit Claims

Cryptocurrency platform, Gemini, recently submitted a reply brief in a bid to dispel the lawsuit from the U.S. Securities and Exchange Commission (SEC).

At the heart of the suit is the allegation that Gemini Earn, a service where customers can loan cryptocurrencies like Bitcoin to Genesis, violated securities laws by offering non-registered securities.

Documents from Aug. 18, found in the U.S. District Court for the Southern District of New York, highlight Gemini’s stance that the SEC’s claims are ambiguous. The response stated, “Understanding Section 5 of the securities act is straightforward,” emphasizing that the SEC has not distinctly identified the terms for alleging a breach of the act. The filing further expressed, “The SEC’s indecision about the exact security in question only underlines the fragility of its case.”

Gemini further pressed the point that the court should sidestep the “complicated arguments” put forth by the SEC. Instead, the SEC should pose clear inquiries to confirm if it’s dealing with a security. Relevant questions include the details of the alleged security’s sale, the involved buyer and seller, and the price set.

Furthermore, Gemini asserted that the SEC must first pinpoint the unregistered security, and then highlight its sale or intended sale, a process they argue the SEC failed to follow. “The SEC hasn’t met this responsibility, and their counterarguments sidestep the court’s primary question,” mentioned the filing.

Earlier on May 27, Gemini’s court documents suggested that activities under the Gemini Earn program essentially represented loans and urged the SEC to retract their complaint.

Adding to the dialogue on Aug. 19, Jack Baugham from JFB Legal, representing Gemini, commented on X (previously known as Twitter), hinting at the SEC’s evolving stance throughout the lawsuit. He remarked, “The SEC appears to be grasping at straws. Their inability to settle on a specific security is evident.” Baugham spotlighted the inconsistent nature of the SEC’s argument, noting their fluctuating position on whether the Loan Agreement or the entire Gemini Earn program is considered a security.