Recently, Gemini filed a brief with the U.S. District Court for the Southern District of New York (SDNY) seeking the dismissal of a lawsuit filed by the SEC against them.
In contrast to Binance, Coinbase, and Bittrex, who have addressed similar matters through out-of-court settlements, Gemini has chosen to challenge the allegations. They argue that the charges brought against them lack clarity.
Gemini Challenges Validity of SEC Complaint Based on Lack of Specificity
Reportedly, Gemini’s legal representatives asserted that for a complaint related to the unregistered sale of securities to be valid, the SEC must specify the security in question and confirm an actual sale. However, the lawyers for Gemini argued that these two prerequisites have not been satisfied, thus nullifying the complaint.
According to the legal document, the regulatory agency has fallen short of meeting this burden, and its counterarguments sidestep this crucial aspect. Strangely, the SEC’s response asserts the existence of two distinct securities: the Master Digital Asset Loan Agreement (“MDALA”) and the Gemini Earn program itself.
However, this contradicts the Complaint’s claims, and the SEC’s inability to identify the security in question underscores its weak position. This not only contravenes fundamental equity but also disregards the necessity for clear notification.
Gemini’s Counterarguments and Request for SEC Lawsuit Dismissal
Furthermore, with regards to the Gemini Earn program, Gemini’s legal team contends that no security sales have ever occurred. Rather, the transactions within the program consist solely of loans and the subsequent repayment of these loans.
Although the SEC cites the legal precedent (Chris-Craft Indus. v. Bangor Punta Corp.) suggesting future security sales, Gemini argues its irrelevance. Gemini asserts that the mentioned clause is purely hypothetical.
As indicated in the document, the confirmation of security sales remains uncertain. Even if the court recognizes both alleged offerings as securities, Gemini’s lawyers ask the court to evaluate independently if the SEC’s claims meet valid lawsuit criteria. If the court agrees with Gemini, the cryptocurrency platform urges the case’s dismissal.
The SDNY will review the plea and provide commentary in due course.
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