Image Credits: CryptoAvanza
Gemini Trust Company, an American cryptocurrency exchange, has taken a significant legal step by submitting a reply memorandum in response to the US Securities and Exchange Commission (SEC) in the U.S. District Court for the Southern District of New York. The objective behind this move is to have the ongoing lawsuit between the SEC and Gemini dismissed.
Earlier this year, the SEC initiated legal action against both Gemini and Genesis Global Capital, alleging that these cryptocurrency firms engaged in the trading of unregistered securities via the Gemini Earn crypto asset lending program. The SEC’s claim was based on the notion that the sale of these unregistered securities allowed the platforms to accumulate billions of dollars in crypto assets from their customers. This lawsuit emerged following a separate legal action by investors who accused Gemini and its co-founders of engaging in fraudulent activities.
In response, both Genesis and Gemini have taken a stance to challenge the lawsuit. They argue that the Gemini Earn program should not be classified as a security. Their primary contention is that the transactions executed were essentially loans rather than securities. Gemini further expressed its disagreement with the lawsuit in an official blog post, labeling it as “ill-conceived.”
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On August 18, Gemini officially lodged a memorandum with the court, urging the dismissal of the SEC’s lawsuit against the exchange. The crux of their argument revolves around the SEC’s alleged lack of clarity in its accusations and arguments. Gemini emphasizes that although Section 5 of the securities act is not inherently complex, the regulators have failed to present a clear and concise statement of their case. According to Gemini, the SEC’s uncertainty in identifying the specific security at the center of the matter only highlights the fragility of their position.
Gemini has brought attention to the fact that the SEC has evaded crucial inquiries pertaining to the sale of the supposedly unregistered securities. The platform has requested the court to disregard the intricate statements made by the SEC, which Gemini characterizes as “convoluted.” In addition, Gemini has underscored fundamental legal principles that support their plea for the lawsuit to be dismissed. The memorandum asserts that any claim put forth must be “plausible” and cannot be built solely on “conclusory allegations.”
