The United States Securities and Exchange Commission has accused crypto firms Gemini and Genesis of selling unregistered securities through the Gemini Earn program. A federal judge has ruled that the SEC's allegations are plausible enough to continue in court.摘要：TheUnitedStatesSecuritiesandExchangeCommission’sallegationthatcryptofirmsGeminiandGenesissoldunregisteredsecuritiesthroughtheGeminiEarnprogramisplausibleenoughtocontinueincourt,afederaljudgehasruled...
In a 32-page order, New York District Court Judge Edgardo Ramos rejected Gemini and Genesis' motions to dismiss the SEC's lawsuit. The judge also denied a separate request to stop the SEC's order for the firms to cease selling securities and hand over Gemini Earn profits if the SEC wins the suit.
Judge Ramos stated that the SEC's suit "plausibly alleges" that Gemini Earn met the requirements of an investment contract under the Howey test, a legal framework to classify securities. The judge pointed out that Genesis pooled assets on its balance sheet rather than segregating them and lent the funds to institutional borrowers, and that customers' "expectation of profits was dependent on Genesis' efforts."
The order also upheld the SEC's allegations that Gemini Earn agreements were notes, which are a debt security obligating loan repayments with interest.
Although the order does not determine the outcome of the case in favor of the SEC, it indicates that the regulator has a plausible case. All parties will now proceed with gathering evidence, and the SEC still has to prove its case in court.
Last month, Genesis reached a $21 million settlement with the SEC in a separate bankruptcy court filing. In November 2022, Gemini Earn had around 340,000 customers and $900 million in assets under management, according to the SEC's suit.
In light of these developments, Genesis filed for bankruptcy after the SEC's suit in January last year, and Gemini agreed to return $1.1 billion to Gemini Earn customers in a settlement with New York's financial regulator.
