Battle of Billion-Dollar Crypto Titans: Gemini and Genesis Fight SEC Lawsuit to Save 'Gemini Earn' and Reclaim Users' Assets!

Crypto exchange Gemini and insolvent crypto lender Genesis Global Capital are seeking the dismissal of a lawsuit by the Securities and Exchange Commission (SEC). The suit alleges that "Gemini Earn", which enabled customers to lend digital currencies like Bitcoin to Genesis for a fee, breached securities laws by offering unregistered securities.

Both firms argue in their legal documents that their Earn product, which allows coin lending for yield, shouldn't be seen as a security. Genesis asserts that the transactions were loans and asks for the case dismissal, or alternatively, to disregard the SEC's demands for a permanent injunction and disgorgement.

The claim argues that Gemini, not Genesis, managed the customer-facing parts of the Earn program. Gemini, asserting its role as a transfer agent, labelled the SEC's lawsuit as "misguided" in a blog update.

Following the SEC's lawsuit, Genesis declared bankruptcy, causing Earn users to face withdrawal limits. Gemini has subsequently filed a substantial claim, aiming to recoup over $1.1 billion in assets for 232,000 Earn users.

Presently, Gemini, Genesis, and parent company, Digital Currency Group (DCG), are involved in settlement negotiations. A tentative agreement from February remains unconfirmed, with DCG recently missing a $630 million loan payment to Genesis.

Simultaneously, Gemini and other creditors are working on a revised reorganization plan, which can be independently pursued if negotiations fail, aiming for the best outcome for Earn users.

Jack Baughman, founding partner of JFB Legal, responsible for the case, expressed in a tweet that the SEC's suit only complicates retrieving assets from Genesis bankruptcy to reimburse Earn users. He asserted that it doesn't expedite the process and release assets for return to Earn users.