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Gemini Fights Back: Urges Court to Dismiss SEC Lawsuit Over Earn Product

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• The SEC has filed a complaint against cryptocurrency exchange Gemini and insolvent lender Genesis for the sale of unregistered securities through their Earn product.
• Gemini has now turned to Digital Currency Group (DCG), Genesis’ parent company, for a resolution and reorganization of their relationship.
• Gemini is warning that DCG may default on its $630 million loan and has chosen Ireland as its new European headquarters in light of increasing regulatory uncertainties.

SEC Lawsuit Against Gemini & Genesis

The U.S. Securities and Exchange Commission (SEC) filed a complaint against cryptocurrency exchange Gemini and insolvent lender Genesis on May 26 saying that the earn product constitutes the selling of unregistered securities. Both companies maintain that their Earn product, which pays consumers to lend out coins, is not a security. However, the SEC believes it is indeed an offering of securities without proper registration or disclosures required by law.

Gemini Urges Court To Dismiss SEC Lawsuit

Genesis disclosed in the petition that the deals were really just loans, and pleaded with the court to either throw out the lawsuit altogether or, “in the alternative, strike the SEC’s requests for a permanent injunction and disgorgement.” Additionally, Gemini has now turned to Digital Currency Group (DCG), Genesis’ parent company, for a resolution and reorganization of their relationship due to DCG’s defaulting on its $630 million loan earlier this month.

Fight Over FTX Crypto Exchange Funds

Since FTX crypto exchange failure in November 2022 users have been unable to access their funds; accordingly Gemini submitted a master claim asking for restoration of approximately $1.1 billion in funds belonging to 232,000 Earn customers.. As well as seeking payment from DCG , Gemini is also choosing Ireland as its new European headquarters due to increasing regulatory uncertainties in America.

Digital Currency Group Defaulted On Loan

Digital Currency Group (DCG) was supposed to pay out $630 million on loan earlier this month but failed resulting in Gemni turning fight towards them . In an effort to reach a resolution between both parties Gemini had been talking with DCG but warned them they may be at risk of defaulting if they do not resolve soon enough.

Conclusion

Overall it seems like both parties are trying hard come up with reasonable solutions however so far no agreement has been met . With increasing regulations aroundcryptocurrency exchanges many companies are looking towards less regulated countries such as Ireland meaning uncertain times ahead until more clarity is provided surrounding these matters

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