Crypto lender Genesis Global Capital and crypto exchange Gemini have filed a motion to dismiss a lawsuit by the U.S. Securities and Exchange Commission (SEC)
Gemini and Genesis Seek Dismissal of SEC Lawsuit
Crypto lender Genesis Global Capital and crypto exchange Gemini have filed a motion to dismiss a lawsuit by the U.S. Securities and Exchange Commission (SEC) accusing them of selling unregistered securities. The SEC alleged that the entities raised billions of dollars from hundreds of thousands of investors through Gemini’s Earn program. In response, Genesis and Gemini argued that the SEC’s treatment of the Master Digital Asset Loan Agreement (MDALA) contract as an unregistered security lacked a basis in law or fact. They also contended that the SEC failed to adequately plead that the MDALA was sold to anyone. The lawsuit came after Genesis froze withdrawals and filed for bankruptcy protection, holding around $900 million in assets from Gemini Earn investors.
Gemini co-founder Tyler Winklevoss had previously criticized the SEC’s lawsuit, describing it as a “manufactured parking ticket.” The motion to dismiss highlights that Gemini did not require lending or borrowing by any party, and that lenders could not transfer or assign their participation without consent from all parties involved. The outcome of the court’s decision on the motion to dismiss will determine the future trajectory of the SEC’s case against Genesis and Gemini regarding the alleged sale of unregistered securities.