• Gemini and Genesis sought to have an SEC lawsuit over their defunct Earn product dismissed
• The companies argued that the contract setting up the Earn program was not a security
• Gemini and Genesis asked the court to dismiss the complaint with prejudice.
Gemini and Genesis Seek Dismissal of SEC Lawsuit
Gemini and Genesis have requested a judge to dismiss an SEC lawsuit concerning its Earn product, according to developments on May 26. Jack Baughman, a lawyer for Gemini, wrote that even if the contract setting up the Earn program was a security, “the SEC would then have to show that the contract was sold. That never happened.”
Earn Program Was Not A Security
Gemini offered Earn in partnership with Genesis Global Capital which allowed users to earn interest on their crypto deposits as the providers re-invested those assets. The company stated that this offer “was nothing more than a lending arrangement” and emphasized that the contracts were not sold on any secondary market, so they do not constitute securities.
Genesis Also Filed Motion To Dismiss Case
Baughman noted that Genesis has also filed a motion to dismiss their case against them. He added that Gemini is “happy to join” in their motion and asked for it to be dismissed with prejudice.
SEC Lawsuit Regarding Defunct Earn Product
The SEC had sued both companies regarding their defunct Earn product which allowed users to earn interest on cryptocurrencies deposited with them. According to Baughman, since no contracts were sold in relation to this product, they should not be considered securities subjecting them both for legal action from the SEC.
In conclusion, both companies are hoping for dismissal of an SEC lawsuit over its defunct Earn product due to lack of sale of any contract related products in order for it not be considered as a security under U.S laws.