Gemini has responded to the US Securities and Exchange Commission (SEC) lawsuit over its Earn Product. The exchange and its partner, now-bankrupt Genesis lender, gear up for a spectacular judicial fight.
Gemini marked the SEC charges as “poorly conceived” and claimed that its novel Earn product, which gives dividends on clients’ crypto deposits, is not a security.
Genesis wades into the debate to show support for Gemini. Together, they are asking the court to toss out the SEC’s frivolous lawsuit and all of its demands for disgorgement and a permanent injunction.
SEC alleges that Gemini is responsible for the Earn program’s customer-facing operations. However, Gemini says it is just a transfer agent for the Earn product.
After the failure of FTX, Genesis was also in danger of going bankrupt. Users of the Earn app have been in a bind since November 2022, when the app suddenly stopped allowing them access to their money.
Gemini sued Digital Currency Group (DCG), the parent firm of Genesis, to recoup $1.1 billion for 232,000 Earn members. Gemini and DCG are in heated discussions to find a solution to the problem.
DCG still needs to make a significant $630 million debt payment to Genesis, leaving the situation unstable. Gemini warns that DCG may have trouble making ends meet.
JFBLegal to represent Gemini
JFBLegal has been retained to act as legal counsel for Gemini. Their lawyer, Jack Baughman, doubts the SEC case against Gemini’s Earn product.
Baughman claims there was no sale of the Gemini Earn Product since it is not a security. He further notes that the SEC’s lawsuit makes it harder to retrieve users’ monies after Genesis’ bankruptcy. Gemini and its legal team intend to fight this complaint aggressively.
Gemini is considering opening a shop in the UK due to growing regulatory uncertainties in its nation. This risky maneuver is part of Gemini’s ongoing effort to fight the SEC’s case.