Key takeaways:
- Gemini replies to SEC lawsuit, files brief to dismiss unregistered securities allegations in Gemini Earn.
- Defence questions SEC’s lack of key details, highlights adherence to legal principles and Securities Act.
Gemini, a cryptocurrency exchange, has submitted a reply brief in its ongoing legal battle against the United States Securities and Exchange Commission (SEC), as it seeks to have the lawsuit dismissed.
The core of the lawsuit centers around Gemini Earn, a service that enables users to lend cryptocurrencies such as Bitcoin to Genesis. The SEC alleges that this service violated securities regulations by offering unregistered securities.
In response, Gemini filed a reply brief on August 18, 2023, contesting the SEC’s lack of answers to critical questions. These questions pertain to crucial details such as the timing of the supposed securities sale, the identities of the buyer and seller involved, and the specific pricing information.
The submitted document stressed the importance of upholding fundamental legal principles and interpreting the Securities Act according to its clear intent.
It argued that the SEC’s inability to pinpoint the exact securities in question underscored the fragility of its position. Consequently, Gemini urged for the dismissal of the complaint with prejudice.
In a detailed 15-page filing submitted on the preceding Friday, Gemini’s legal representatives strongly criticized the SEC’s assertion that both its Gemini Earn interest-earning program and a distinct loan program should be considered as sales to customers.
The lawyers argued that based on the SEC’s prior statements, the regulator lacked the necessary evidence to support its case before the court.
Furthermore, Gemini’s legal team contended that the court should not engage with the intricate analyses presented by the SEC. Instead, they emphasized that the SEC should pose direct and straightforward questions to establish whether Gemini’s offerings qualified as securities.
These questions included determining the timing of the alleged securities sale, identifying the parties involved as buyers and sellers, and specifying the prices that were offered or charged.
Jack Baugham, one of the founding partners at JFB Legal, the law firm representing Gemini, took to X (previously known as Twitter) on August 19 to issue a statement. Baugham pointed out that the United States Securities and Exchange Commission (SEC) appears to be altering its stance as the lawsuit progresses.
Baugham’s statement indicated, “The SEC is in a state of uncertainty. Their ability to define the nature of the security in question is faltering.” He emphasized the perplexing nature of the regulator’s argument by stating:
“While they assert that the Loan Agreement was categorized as a security, they simultaneously argue that the entirety of the Gemini Earn program itself should be considered a security. This line of reasoning seems inherently illogical.”
Baugham’s commentary underscores the inconsistency and lack of clarity in the SEC’s position regarding the Gemini case.
