Court allows SEC lawsuit against Gemini, Genesis to proceed
Key Takeaways
- A New York district court judge found the SEC’s claims against Gemini and Genesis to be valid and allowed the lawsuit to continue.
- The lawsuit centers on claims that the Gemini Earn program involves the sale of unregistered securities.
- The court allowed the lawsuit to proceed, but the decision does not yet mean a victory for the SEC.
New York District Court Judge Edgardo Ramos ruled that the U.S. Securities and Exchange Commission (SEC): Lawsuits may proceed against cryptocurrency companies Gemini and Genesis.
Ordered on March 13th We uncovered allegations of selling unregistered securities through the Gemini Earn program.—Managed by Genesis and powered by Gemini—It’s plausible It rejected the company’s attempt to dismiss the lawsuit..
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The SEC’s lawsuit, filed in January 2023, alleges: Get offers and sales of Gemini unregistered securities It is based on legal criteria used to determine what constitutes a security.
The court ruled as follows: Genesis pooled assets on its balance sheet and extended loans to institutional borrowers. Customer interests are directly related to Genesis’ efforts.
Additionally, Judge Ramos agreed with the SEC’s argument that: Gemini savings A contract may be considered a memorandum; It was recognized as a type of debt security that required repayment of the loan with interest.
At this stage, under both tests, the court finds merit in the complaint alleging that defendants offered and sold unregistered securities through the Gemini Earn program.
Court too It denied the company’s request to stop the SEC’s order to stop selling securities and order it to forgo profits from its Gemini Earn program. If the SEC wins its legal battle.
Despite the decision to proceed with the lawsuit, This does not mean a ruling in favor of the SEC. Regulators will need to substantiate their claims as the case progresses to the evidence-gathering phase.
Genesis filed for bankruptcy Following the lawsuit. In February Gemini has agreed to a settlement with New York financial regulators to refund $1.1 billion to Gemini Earn customers. through bankruptcy procedures
As the case unfolds, it highlights the importance of regulatory compliance and the potential impact on the broader cryptocurrency market.
With a master’s degree in Economics, Politics, and Culture in East Asia, Aaron wrote a scientific thesis analyzing the differences between Western capitalism and collective capitalism after World War II.
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