Cryptocurrency exchange Gemini has asked a federal judge to dismiss an SEC lawsuit accusing the exchange of selling unregistered securities under the Gemini Earn program.
Gemini's lawyers rejected the SEC's argument that the Gemini Earn interest program and the Digital Asset Lending Agreement (MDALA) should qualify as sales to customers. In January, the department asked the court to impose an injunction on Gemini Earn, saying that through the program, Genesis and the Gemini platform attracted billions of dollars in crypto assets from 340,000 retail investors.
Lawyers left open the question that Gemini Earn and MDALA might be related to the securities, but denied the SEC's claim that they were sold to clients as unregistered securities. The lawyers explained that the loan agreements were not offered or sold to clients. Receiving interest on invested crypto assets is not considered a sale of securities, since we are talking about borrowed assets that can be returned upon request of the client. Therefore, the SEC's arguments are inconsistent, Gemini said in its motion.
“Even a child playing at a lemonade stand knows that when something is sold, ownership of the thing—in this case the lemonade—passes from the seller to the buyer in exchange for money. Even if MDALA is related to securities, it is not a sale,” the lawyers wrote.
Recall that in July, Gemini co-founder Cameron Winklevoss sued Digital Currency Group (DCG) and its leader Barry Silbert for failure to pay $1.46 billion to creditors about the Gemini Earn program.
