Gemini Counters US SEC Lawsuit with Motion to Dismiss, Citing Flawed Allegations

Gemini crypto exchange is moving to counter the legal action by the United States Securities and Exchange Commission (SEC).

The exchange is looking for the dismissal of the SEC’s lawsuit, saying that the regulatory agency has failed to provide enough evidence of unregistered securities being sold on its platform.

This legal action marks a crucial chapter in the landscape of crypto regulations.

In response to the SEC’s allegations, Gemini exchange has taken a decisive stance, claiming that the regulatory body has not adequately demonstrated that the exchange sold unregistered securities.

Filed in January, the SEC’s lawsuit accused both Gemini and Genesis, a subsidiary, of mismanaging customer funds.

Specifically, the US SEC highlighted issues surrounding Gemini Earn, a program for earning interest on cryptocurrencies, and the Master Digital Asset Loan Agreement (MDALA), a mandatory component for participation in the program.

Further, the SEC’s lawsuit pivoted on its classification of Gemini Earn and MDALA as securities. However, Gemini’s legal team, in a court filing, contended that the regulatory agency has not been able to substantiate its claims in a court of law.

The crux of Gemini’s file for dismissal revolves around the notion that the SEC has not plausibly alleged the sale or offering of any security on the exchange.

Gemini’s attorneys, John Baughman and John Nathanson, emphasized the SEC’s inability to provide essential details such as the sale date, parties involved, and price set for the alleged security. This absence of critical information, as per Gemini’s legal team, severely weakens the SEC’s case.

Gemini’s legal representatives questioned the SEC’s approach in their court filing. They pointedly asked whether the SEC genuinely believed that the entire Gemini Earn program could be considered a purchasable entity or that it could be held for sale.

They dismissed such assertions as disconnected from the facts presented in the SEC’s complaint and as far from reality.

Gemini’s pursuit of a dismissal involves seeking an oral hearing to present its case against the SEC’s lawsuit.

This legal conflict follows closely on the heels of Gemini’s own legal action against Digital Currency Group (DCG) and CEO Barry Silbert.

The lawsuit claimed that DCG and Silbert were involved in a fraudulent scheme that extended substantial crypto and US dollar loans to Genesis, a subsidiary of DCG. DCG, in response, filed a motion to dismiss this lawsuit.