US Federal Judge Edgardo Ramos has rejected a motion to dismiss the US Securities and Exchange Commission's (SEC) lawsuit against the Gemini Earn program. He alleges that Gemini and Genesis offered and sold unregistered securities.
“Under the Howey and Reves tests, the SEC plausibly alleges that defendants offered and sold unregistered securities through the Gemini Earn program. As a result, the motion to dismiss the case is denied,” the court said in its ruling.
The document also said that Gemini and Genesi promoted Gemini Earn as an investment opportunity and publicly stated investors' ability to make a profit.
Gemini attorney Jack Bauman told The Block that this is a preliminary ruling and the company will ultimately prevail in the case. He also added that the Gemini Earn program did not involve the sale of any securities.
In addition, the judge stated that at the time the withdrawal of funds from Gemini Earn was stopped, 340,000 users were participating in the program. At the time, Genesis kept $900 million of client funds on the platform.
Let us recall that on February 28, 2024, Gemini reached an agreement in principle with Genesis. If this arrangement is approved by the bankruptcy court, Earn users will be able to receive their funds in full.
In August 2023, Gemini filed a motion to dismiss the SEC's lawsuit based on the accuser's lack of case.
