- A Manhattan judge ruled against Gemini and Genesis, favoring the Securities and Exchange Commission (SEC).
- The judge ruled that the SEC could proceed with the lawsuit against these firms.
- Though the firms filed to dismiss the lawsuit, the judge asserts that the SEC’s suit plausibly alleges the violation of securities laws.
In a recent court filing, a New York judge ruled against the crypto lender Genesis and crypto exchange Gemini, ruling that the SEC could move forward with their lawsuit against these firms. U.S. District Judge Edgardo Ramos denied both defendants’ motion to dismiss the regulator’s complaint claiming that the SEC’s suit “plausibly alleges” the firms’ violation of securities laws.
Fox Business reporter Eleanor Terrett took to X on March 14 to share insights on the court’s ruling in favor of the Securities and Exchange Commission (SEC). She wrote on X, “A Manhattan judge has ruled the SEC can move forward with its lawsuit against Gemini and Genesis for its crypto lending product.”
In January 2023, the SEC sued Gemini and Genesis for “the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program.” Investors have also accused Gemini and its co-founders, Tyler and Cameron Winklevoss, of allegedly being involved in fraudulent activity and breaching the Exchange Act.
Subsequently, Gemini filed a motion against the regulator’s complaint, arguing that the Gemini Earn should not be considered a security. However, in the recent ruling, Judge Ramos asserted that the U.S. Supreme Court analyzed the Earn program with a test. Reportedly, the same test was employed by other judges to check if digital assets are securities.
Following the test, the court concluded that the Earn program was a security. While the program met the security test as customers invested in it with a reasonable expectation of profit, the judge stated that the SEC “plausibly alleges that defendants offered and sold unregistered securities through the Gemini Earn program.”
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