Gemini and Genesis, two leading cryptocurrency exchanges, are gearing up to challenge the Securities and Exchange Commission’s (SEC) lawsuit regarding their terminated Earn product. The SEC filed a lawsuit against the exchanges in December 2020, alleging that the Earn product was an unregistered security offering.
The Earn product was launched in May 2018 and allowed users to earn interest on their cryptocurrency holdings. The SEC claims that the product was a security because it involved an investment of money in a common enterprise with the expectation of profits solely from the efforts of others.
Gemini and Genesis have both denied the allegations and are now seeking to have the lawsuit dismissed. They argue that the Earn product was not a security because it did not involve an investment contract, which is a key element in determining whether something is a security under US law.
The exchanges also argue that the SEC’s lawsuit is based on outdated guidance and that the agency has failed to provide clear guidance on how cryptocurrency products should be regulated. They claim that this lack of clarity has created confusion and uncertainty for the industry, which has hindered innovation and growth.
In a joint statement, Gemini and Genesis said, “We believe that the SEC’s lawsuit is misguided and that our Earn product was not a security. We are committed to working with regulators to develop clear and fair rules for the cryptocurrency industry, but we cannot do so if we are constantly facing lawsuits based on outdated guidance.”
The outcome of this case could have significant implications for the cryptocurrency industry as a whole. If Gemini and Genesis are successful in challenging the SEC’s lawsuit, it could set a precedent for other companies to launch similar products without fear of regulatory action.
However, if the SEC’s lawsuit is upheld, it could have a chilling effect on innovation in the industry and lead to more companies being hesitant to launch new products. It could also lead to increased regulatory scrutiny and enforcement actions against other companies in the space.
Overall, the Gemini and Genesis case highlights the need for clear and consistent regulatory guidance for the cryptocurrency industry. As the industry continues to grow and evolve, it is important for regulators to work with companies to develop rules that promote innovation while also protecting investors and maintaining market integrity.
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- Source: https://zephyrnet.com/gemini-and-genesis-seek-to-dismiss-sec-lawsuit-over-defunct-earn-product/