Gemini, a cryptocurrency exchange, has adopted a tough stand in an ongoing legal struggle, continuing its efforts to dismiss a lawsuit brought against it by the US SEC. Gemini’s most recent court filing emphasizes its contention that the SEC’s charges and arguments lack clarity and consistency.
The case is centered on Gemini Earn, a tool that allows users to lend crypto assets such as Bitcoin to Genesis. The SEC claims that by marketing unregistered securities, this service violated securities regulations. Gemini has submitted a reply brief in response, as part of its ongoing fight to have the case dismissed.
In August 18 filings with the U.S. District Court for the Southern District of New York, Gemini contends that the SEC’s allegations lack clarity and robust support. The filing emphasizes the lack of specific conditions for alleging a violation of Section 5 of the Securities Act.
Gemini’s legal team stresses the need for clear determination, urging the SEC to specify if the transaction constitutes a security. As per the company’s argument, the SEC should identify the unregistered security before specifying the associated sale or offer. According to Gemini, the SEC has gone short in achieving this key criteria.
Gemini Challenges SEC’s Shifting Stance Amid Lawsuit Battle
The filing also highlights the SEC’s changing posture over time. It had earlier contended on May 27 that transactions inside its Gemini Earn program constituted loans, a stance it reiterated while requesting that the complaint be dismissed. Jack Baugham, a founding partner of JFB Legal, which represents Gemini, slammed the SEC’s changing argument even further.
On August 19, Baugham said on X about the SEC’s discrepancies, saying. “The SEC is floundering”. They can’t even agree on the security. Baugham emphasized the SEC’s conflicting stance, referencing its assertion that both the Loan Agreement and its Earn program could qualify as securities.
As legal proceedings unfold, the case highlights complexity and uncertainty in classifying crypto-related activities within current securities regulations. The Gemini-SEC conflict reveals evolving crypto regulation and serves as a test case for establishing boundaries in the burgeoning crypto landscape.