- Gemini has turned the fight to Genesis’ parent company, Digital Currency Group (DCG).
- DCG defaulted on a $630 million loan earlier this month to Gemini.
The U.S. Securities and Exchange Commission (SEC) filed a complaint against cryptocurrency exchange Gemini and insolvent lender Genesis on May 26 saying that the earn product constitutes the selling of unregistered securities.
Gemini maintained that its Earn product, which paid consumers to lend out coins, was not a security. Genesis disclosed in the petition that the deals were really just loans. Accordingly, it pleaded with the court to either throw out the lawsuit altogether or, “in the alternative, strike the SEC’s requests for a permanent injunction and disgorgement.”
According to the SEC’s lawsuit, it was really Gemini who “ran the customer-facing operations of the Earn program,” not Genesis. The SEC filed a lawsuit against Genesis, a cryptocurrency lending platform, and the company in January 2023, just before Genesis filed for bankruptcy.
Since the failure of the FTX cryptocurrency exchange in November 2022, users of the crypto exchange have been unable to access their funds.
Gemini has turned the fight to Genesis’ parent company, Digital Currency Group (DCG), while its Earn customers suffer. The master claim was submitted by Gemini on Monday, asking for the restoration of approximately $1.1 billion in funds belonging to 232,000 Earn customers.
Gemini and DCG have been talking in an effort to reach a resolution and reorganize their relationship. DCG was supposed to pay Genesis $630 million on a loan earlier this month, but they were late. So Gemini has issued a warning that DCG, the parent company, may default. In light of the increasing regulatory uncertainties in the United States, Gemini has filed against the SEC and has chosen Ireland as the new European headquarters.
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