Crypto exchange Gemini is calling out the U.S. Securities and Exchange Commission (SEC) in its lawsuit over the platform’s Earn program.
In a lengthy post, Gemini lawyer Jack Baughman says that the SEC’s lawsuit targeting the protocol’s Earn program, which allowed customers to loan their digital assets to crypto firm Genesis as a means of earning interest, is “absurd” and contradictory.
“The SEC is floundering. They can’t even decide what the security is. On the one hand, they claim that the loan agreement was a security. On the other hand, they claim that the entire Gemini Earn program was itself a security – an argument absurd on its face.
Another absurdity is the SEC’s efforts to identify a ‘sale.’ They never do, and instead fall back on arguments like this: Gemini and Genesis ‘did in fact sell their promise to pay interest in exchange’ for crypto assets. Not only is this factually wrong, it is ridiculous. A sale and a loan are different things. At some point, words must mean something.”
Gemini recently filed a motion asking the court to dismiss the case, saying that the regulatory agency has not met the burden of proving the existence and sale of a security.
“The fact that the SEC cannot decide what is the security at issue only underscores the weakness of its position. It also violates fundamental fairness and the requirement of fair notice.
In any event, even assuming for the sake of argument that SEC has somehow described a security (under either of its inconsistent theories), it has not plausibly alleged that such security was ever sold or offered for sale. The Court does not need to engage in any of the convoluted analyses advanced by the SEC.”
The SEC originally sued Gemini in January on allegations that the company was selling unregistered securities. Weeks later, SEC Chair Gary Gensler deemed every digital asset other than Bitcoin (BTC) as a security.
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