Gemini and Genesis have asked a judge to dismiss the SEC lawsuit regarding their Earn products, according to developments. May 26th.
Genesis says Earn is not a security
Gemini’s attorney, Jack Bowman, wrote:
“The SEC claims that the contracts that set up the Earn program are themselves securities. It didn’t happen.”
Gemini partnered with Genesis Global Capital to deliver Earn. This allowed users to earn interest on their cryptocurrency deposits when providers reinvested those assets.
Gemini said in its latest filing that the offer “is nothing more than a financing arrangement.” The company raised many issues, but the main allegations focused on the fact that the contracts were not sold on the secondary market.
As a result, the loan agreements entered into by the company do not constitute securities, the company said. The court called for a “dismissal of the charges with prejudice.”
Noting that Genesis has filed a motion to dismiss a similar lawsuit, Bowman said Gemini is “enthusiastic to join this discussion.”
Acquisition stopped in November
Genesis forced Earn to suspend withdrawals in November 2022. Gemini then permanently closed the service on January 10, 2023.
The SEC filed charges against Gemini and Genesis on Jan. 12, accusing them of providing unregistered securities and evading disclosure requirements.
Genesis’ lending arm further filed for bankruptcy on January 19, 2023. This continues to affect Gemini’s ability to obtain funds owed to former Earn users. Recently, Gemini said Genesis’ parent company failed to pay $630 million.
Mr. Bowman acknowledged those problems, noting that Genesis’ bankruptcy is “dragging.” He said the SEC lawsuit will only make it more difficult to compensate Earn users.
Earnuser owed up to $900 million in January.
An article calling for the dismissal of the SEC lawsuit over the discontinued Earn product by Gemini and Genesis first appeared on CryptoSlate.