SEC Lawsuit Against Gemini and Genesis Given Green Light by Federal Judge

Federal Judge Rules SEC Lawsuit Against Gemini and Genesis to Proceed

A federal judge has ruled that the US Securities and Exchange Commission’s lawsuit against crypto firms Gemini and Genesis will proceed in court. The judge’s decision comes after Gemini and Genesis attempted to have the lawsuit, which alleges the sale of unregistered securities through the Gemini Earn program dismissed.

Legal Proceedings Continue

In a 32-page order issued on March 13, New York District Court Judge Edgardo Ramos rejected the motions to dismiss filed by Gemini and Genesis, stating that the SEC’s allegations were plausible enough to continue with the legal proceedings. Additionally, the judge denied a separate request by the companies to halt the SEC’s demand for them to cease selling securities and to hand over Gemini Earn profits if the SEC prevails in the lawsuit.

SEC’s Lawsuit Allegations

Judge Ramos acknowledged that the SEC’s lawsuit, filed in January 2023, “plausibly alleges” that the Gemini Earn program involved the sale of unregistered securities. The judge further noted that the SEC had provided sufficient evidence to establish that Gemini Earn met the criteria of an investment contract under the Howey test.

Genesis Settlement with the SEC

In a bankruptcy court filing last month, Genesis announced that it had reached a settlement agreement with the SEC, agreeing to pay $21 million to resolve the lawsuit. Genesis filed for bankruptcy after the SEC’s lawsuit was filed in January of the previous year. In February, Gemini agreed to return $1.1 billion to Gemini Earn customers through the Genesis bankruptcy proceeding, as part of a settlement with New York’s financial regulator.

SEC Actions Against Crypto Firms

Over the past year, the SEC has filed numerous lawsuits against crypto firms, with SEC Chair Gary Gensler consistently asserting that most cryptocurrencies should be classified as securities. The agency initiated a civil case against Sam Bankman-Fried, co-founder of FTX, and also filed lawsuits against other major crypto players, including Binance, its CEO Changpeng Zhao, and Coinbase.