UpdatesMay 30, 2023

Cryptocurrency companies Gemini, as well as Genesis, demand that the SEC lawsuit be dismissed

Two US companies have been accused by the US regulator of selling unregistered securities.

The Gemini cryptocurrency exchange and the popular Genesis platform are strongly demanding that the lawsuit filed against them by the US Securities and Exchange Commission (SEC) be dismissed. This accusation was made in January 2023 against a loan program called Gemini Earn.

Cryptocurrency companies Gemini and Genesis demand that the SEC lawsuit be dismissed

Two well-known American companies focused on trading digital currencies filed a motion to the court to dismiss the lawsuit they received in January this year from the US SEC. The regulator responsible for the supervision of the securities market in the US has stated that the Gemini Earn loan program may have violated applicable law.

In the opinion of the SEC, Gemini Earn clearly constituted an unregistered offer of securities and was intended to circumvent US law. Both accused companies categorically disagree with this. Genesis claims that this program only involved the creation of cryptocurrency loans and had nothing to do with the issuance of securities from the very beginning. In addition, the company alleged that the US regulator failed to provide credible evidence that the loans in question had been transformed in any way into investment contracts or collateral notes.

After analyzing the whole situation, very similar conclusions were presented by Gemini, additionally claiming that the SEC is currently trying hard to transform the Gemini Earn program into something that it is not and was never intended to be. This popular American cryptocurrency exchange emphasized that it did not offer any securities under this program, in particular those that would violate US laws. The moves of both companies are no surprise, given that in January they announced a decisive fight with the SEC.

The SEC is in the fight against many companies in the digital currency industry

The clear intention of the US regulator was to attack as many companies offering cryptocurrency products as possible this year. According to the chairman of the SEC - Gary Gensler, all digital currencies except Bitcoin (BTC), which is the only one recognized as a commodity, are nothing more than securities. The approach of this official raises objections among the broadly understood digital currency community. It is also fundamentally inconsistent with the attitude of the US futures market regulator, which is the CFTC, which considers Ethereum (ETH) and Litecoin (LTC) as commodities.

Gary Gensler, however, remains adamant in his convictions. At the time of filing the lawsuit against Gemini and Genesis, he strongly emphasized that the allegations faced by Gemini Earn are intended to illustrate to the public that digital currency lending platforms and other intermediaries must be fully aware that they should always comply with US securities laws.