Bitrabo Editorial
Gemini and Genesis Global Capital launched Earn, a service that allows users to earn interest on deposits of their cryptocurrencies. The companies invest the deposited assets and then pay interest to the users. The main argument stated in Gemini’s recent filing was that their offer was just a lending arrangement because there were no contract sales on a secondary market. Gemini and Genesis filed legal documents to argue that Gemini Earn should not be considered a security.
Genesis Requests Dismissal of Complaint
Genesis claims that the transactions are loans and has asked the court to dismiss the complaint. Alternatively, the company has requested the court to strike the SEC’s requests for a permanent injunction and disgorgement. Gemini itself is in charge of the customer-facing aspects of the Earn program, despite Genesis’ responsibility for the investment of deposited assets. Gemini has addressed Earn users in a blog stating that SEC’s lawsuit is ill-conceived and has highlighted its role as a transfer agent for the program.
Earn was compelled to suspend all withdrawals by Genesis in November 2022, which led to the eventual permanent closure of the service by Gemini on January 10, 2023. Shortly after the closure, the SEC charged Gemini and Genesis with offering unregistered securities and circumventing disclosure requirements.
Gemini Claims Missed Payment by Genesis Parent Company
In a new twist of events, Genesis’ lending arm filed for bankruptcy on January 19, 2023, further complicating Gemini’s ability to recover funds due to former Earn users. Recently, Gemini revealed that Genesis’ parent company had not paid $630 million owed to creditors and is now participating actively in an amended plan of reorganization with other creditors.
Jack Baughman, a founding partner of JFB Legal, the legal representative for Gemini, has mentioned that the SEC’s case has made it difficult to recover assets from the Genesis bankruptcy to fully compensate Earn users. Baughman suggests that instead of pursuing the SEC’s case, the emphasis should be placed on accelerating the process of releasing assets to return to affected users.
-Featured Image From City A.M, Chart From TradingView.com