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<p>The post <a href="https://coinpedia.org/news/judge-rejects-gemini-genesis-motion-to-dismiss-sec-lawsuit/">Judge Rejects Gemini, Genesis Motion to Dismiss SEC Lawsuit</a> appeared first on <a href="https://coinpedia.org">Coinpedia Fintech News</a></p> 
<p>In a shocking trail news, On March 13, Judge Edgardo Ramos denied Gemini and Genesis’ request to dismiss the SEC’s lawsuit in a 32-page order. In the latest <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.592343/gov.uscourts.nysd.592343.54.0.pdf">ruling</a>, the U.S. District Court in New York suggested that Gemini and Genesis may have violated securities regulations by offering unregistered securities, based on the Howey and Reves standard tests.</p> 
<h2 class="wp-block-heading" id="h-sec-s-power-play-gemini-earn-s-securities-status-raises-eyebrows"><strong>SEC’s Power Play: Gemini Earn’s Securities Status Raises Eyebrows</strong></h2> 
<p>Notably, Gemini’s Earn launched in February 2021, offered a lucrative 8% interest on crypto investments. As per an SEC complaint in November 2022, it had amassed 340,000 users and $900 million in assets. However, the withdrawals were halted by the company due to high demand exceeding available funds. However, the new ruling denies motions by Gemini and Genesis to dismiss the SEC’s lawsuit and also denies a separate request to halt the SEC’s action and to surrender profits from Gemini Earn if the SEC prevails.&nbsp;</p> 
<p>Later the judge found that the SEC’s lawsuit sufficiently <a href="https://x.com/worldcryptospot/status/1768002594046144852?s=20">proved </a>that Gemini Earn qualified as a security under the US Supreme Court’s Howey test. Customers invested in a common venture and expected to make a profit. Therefore, the SEC’s accusation that unregistered securities were sold through Gemini Earn is plausible, according to the judge.</p> 
<p>Also Read: <a href="https://coinpedia.org/news/binance-executives-detained-amid-nigerias-26b-fx-crisis-court-hearing-set-on-march-20/">Binance Executives Detained Amid Nigeria’s $26B FX Crisis: Court Hearing Set on March 20</a></p> 
<h2 class="wp-block-heading" id="h-genesis-fallout"><strong>Genesis Fallout</strong></h2> 
<p>The Howey test is applied in almost all cases to decide if digital assets are securities, with mixed outcomes in court rulings. Notably, Genesis declared bankruptcy after the SEC filed the lawsuit. Gemini Trust Co., founded by Cameron and Tyler Winklevoss, agreed last month to reimburse customers with at least $1.1 billion through the Genesis bankruptcy settlement with New York state.</p> 
<p>The SEC contends that Gemini Earn agreements qualify as notes, a type of debt security, which the judge also acknowledged. While this ruling doesn’t guarantee a victory for the SEC, it allows the case to proceed, with both sides now proceeding to gather evidence. Genesis recently reached a $21 million settlement with the SEC, and Gemini has agreed to return $1.1 billion to Gemini Earn customers through Genesis’ bankruptcy proceedings.</p> 
<h2 class="wp-block-heading" id="h-flash-in-the-pan"><strong>Flash in the Pan</strong></h2> 
<p>In May 2023, the two firms asked the court to drop the case, arguing that the SEC hadn’t proven their Master Digital Asset Loan Agreement was a security. Wednesday’s ruling allows both parties to proceed with pretrial discovery, gathering evidence before trial. Once they have exchanged records and obtained testimony from witnesses, the companies might attempt to dismiss the case again.</p> 
<h2 class="wp-block-heading" id="h-crypto-in-trouble"><strong>Crypto in Trouble</strong></h2> 
<p>The SEC’s case against Gemini and Genesis is just one of several high-profile lawsuits in the crypto industry. Alongside Coinbase and Kraken, Binance also faces allegations of illegal securities offerings. Despite settling with other agencies, Binance’s case with the SEC is ongoing.</p>

Judge Rejects Gemini, Genesis Motion to Dismiss SEC Lawsuit

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