Crypto exchange Gemini is challenging the US Securities and Exchange Commission (SEC) in its lawsuit over the platform’s Earn program.
In a lengthy post, Gemini attorney Jack Baughman say that the SEC’s lawsuit against the protocol’s Earn program, which allowed customers to lend their digital assets to crypto company Genesis to earn interest, is “absurd” and contradictory.
“The SEC is floundering. They can’t even decide what the security is. On the one hand, they claim that the loan agreement was collateral. On the other hand, they argue that the entire Gemini Earn program itself was a security – an argument that was absurd on the face of it.
Another absurdity is the SEC’s attempts to identify a “sale.” They never do, and instead fall back on arguments like this: Gemini and Genesis did “sell their promise to pay interest in exchange” for crypto assets. Not only is this factually incorrect, it’s ridiculous. A sale and a loan are different things. At some point, words have to mean something.”
Gemini recently filed a motion asking the court to dismiss the case, alleging the regulator failed to meet the burden of proof of the existence and sale of a security.
“The fact that the SEC cannot decide which security to deal with only underscores the weakness of its position. It also violates basic fairness and the requirement of fair disclosure.
In any case, even assuming for the sake of argument that SEC has somehow described a security (according to one of its inconsistent theories), it has not made it plausible that such a security has ever been sold or is for sale offered. The Court need not engage in any of the complex analysis put forward by the SEC.”
The SEC originally sued Gemini in January over allegations that the company sold unregistered securities. Weeks later, SEC Chairman Gary Gensler considered any digital asset except Bitcoin (BTC) a security.
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