Last Updated on August 20, 2023 by Bitfinsider
Gemini, a cryptocurrency exchange, has submitted a reply brief in an effort to have the case against the Securities and Exchange Commission of the United States (SEC) dismissed.
Gemini Earn, a programme that enables users to lend digital assets like Bitcoin to Genesis, is accused of breaking securities laws by providing unregistered securities, according to the lawsuit.
Gemini asserted that the SEC has failed to state a specific claim, according to court documents submitted on August 18 to the Southern District of New York’s U.S. District Court.
The brief argued that the SEC has not explicitly established the requirements for alleging a violation of the securities laws, asserting that “Section 5 of the securities act is not hard to understand”. It said: “The fact that the SEC cannot decide what is the security at issue only underscores the weakness of its position.”
It also contended that the SEC should use simple tests to evaluate if it meets the definition of a security rather than presenting “convoluted analyses” to the court.
The SEC, according to Gemini, must first identify the sale or offer to sell the unregistered security before highlighting the registered one. It stated that the SEC had not accomplished this.
However, the brief noted that “the SEC has not met that burden, and its opposition avoids the question before the court.”
Gemini requested that the SEC dismiss the complaint on May 27 in a court filing where it claimed that transactions made through the Gemini Earn programme were effectively loans.
An assertion that the SEC is altering its defence as the lawsuit progresses was made on X (formerly Twitter) on August 19 by Jack Baugham, a founding partner of JFB Legal, the firm that represents Gemini.
“The SEC is floundering. They can’t even decide what the security is,” Baugham said. He added: “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.”
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