Gemini takes legal action against Digital Currency Group (DCG) over $630 million loan default
The U.S. Securities and Exchange Commission (SEC) has taken legal action against cryptocurrency exchange Gemini and insolvent lender Genesis. The complaint, filed on May 26, accuses both entities of selling investments through their earn product without proper registration, which violates securities regulations.
Gemini argues that its Earn product, which rewarded users for lending out their coins, is not classified as a security. Genesis, on the other hand, stated that the transactions were simply loans. As a result, they have requested the court to dismiss the lawsuit entirely or, as an alternative, remove the SEC’s requests for a permanent injunction and disgorgement.
3 Way Struggle
The SEC’s lawsuit claims that Gemini was primarily responsible for managing the customer interactions in the Earn program, rather than Genesis. The SEC had already filed a lawsuit against Genesis, a platform for lending cryptocurrencies, and this occurred in January 2023, shortly before Genesis filed for bankruptcy.
Also Read This Related: Gemini Chooses Ireland as European Base Amid US Crypto Challenges.
After the FTX cryptocurrency exchange experienced a shutdown in November 2022, users have been unable to retrieve their funds from the platform.
Gemini has shifted its attention to Digital Currency Group (DCG), the parent company of Genesis, while customers who used Gemini’s Earn service face difficulties. Gemini filed a legal claim on Monday, seeking the return of around $1.1 billion in funds that belong to 232,000 Earn customers.
Gemini and DCG have been in discussions to find a solution and improve their relationship. DCG was supposed to pay back a loan of $630 million to Genesis, but they were late in making the payment. As a result, Gemini has raised concerns that DCG, the parent company, might not fulfill its financial obligations. Due to the growing uncertainties in U.S. regulations, Gemini has taken legal action against the SEC and has decided to establish its new European headquarters in Ireland.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
