Cryptocurrency exchange Gemini has taken a step in its bid to counter the lawsuit brought against it by the United States Securities and Exchange Commission (SEC), by submitting a reply brief.
The lawsuit revolves around allegations that Gemini Earn, a service enabling customers to lend cryptocurrencies such as Bitcoin to Genesis, violated securities regulations by offering unregistered securities.
Gemini’s recent court documents, dated August 18 and filed in the U.S. District Court for the Southern District of New York, strongly contest the SEC’s claims.
The exchange asserts that the SEC has failed to make a clear and solid case, indicating that “Section 5 of the securities act is not hard to understand.”
Gemini contends that the SEC’s inability to precisely define the security in question underscores the fragility of its position.
The exchange further posits that the court should not wade through the convoluted analyses presented by the SEC.
Instead, it suggests that the agency should ask direct and uncomplicated questions to ascertain whether the alleged breach qualifies as a security.
Key queries include the timing of the supposed security sale, the identity of the buyer and seller, as well as the offered or charged price.
Gemini argues that the SEC’s responsibility lies in pinpointing the unregistered security before identifying the sale or offer associated with it.
According to Gemini, the SEC has failed to fulfill this basic requirement.
The exchange’s filing asserts that the SEC’s opposition “avoids the question before the court.”
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In earlier court filings on May 27, Gemini contended that transactions conducted within the Gemini Earn program were akin to loans.
The exchange requested the SEC to dismiss the complaint.
In a statement made on August 19, Jack Baugham, a founding partner of JFB Legal representing Gemini, highlighted the changing stance of the SEC as the lawsuit progresses.
Baugham expressed that the SEC’s inability to determine the nature of the security being referred to muddles their argument.
The regulator’s contradictory positions, such as labeling the Loan Agreement a security while simultaneously claiming the entire Gemini Earn program to be a security, are deemed absurd by Baugham.
In summary, Gemini’s reply brief contests the SEC’s lawsuit, emphasizing that the agency has not clearly established its case regarding the alleged breach of securities regulations by the Gemini Earn service.
The exchange argues that the SEC’s confusion about the nature of the security and its inconsistent claims undermine the legitimacy of the lawsuit.
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