Gemini filed a brief addressed to the U.S. District Court for the Southern District of New York (SDNY) late last Friday.
It contained a request from Gemini’s legal team for the dismissal of the court case filed against it by the SEC, citing unclear accusations.
Whereas Binance, Coinbase, and Bittrex – the last of which has since settled outside of court – filed their requests citing improper jurisdiction, overreach, and so on, Gemini claimed it was not even clear what the charges are.
Security Filing Requirements Allegedly Not Met
According to the court document, Gemini argues that in order for a complaint pertaining to the unregistered sale of securities, the SEC would have to identify the security in question and ascertain that a sale had taken place.
However, Gemini’s lawyers claimed that these two conditions have not been met, thus invalidating the complaint.
The agency has not met that burden, and its opposition avoids the question before the court. Oddly, the SEC’s opposition asserts that it has alleged that there are two different securities: the Master Digital Asset Loan Agreement (“MDALA”) and the Gemini Earn program itself.
This is not what the Complaint actually alleges, and the fact that the SEC cannot decide what is the security at issue only underscores the weakness of its position. It also violates fundamental fairness and the requirement of fair notice.
Furthermore, as far as the Gemini Earn program is concerned, Gemini’s lawyers posit that no sale of a security ever took place. Instead, the only transactions to take place in the program are loans and the return of said loans.
Although a case cited by the SEC (Chris-Craft Indus. v. Bangor Punta Corp.) hints that securities could be sold in the future, Gemini argues that this is irrelevant since the mentioned clause is a mere hypothetical.
The Sale of Securities Remains Unconfirmed
The document also claims that even if the court rules that both alleged offerings are indeed securities, the SEC has failed to “plausibly allege” that a sale occurred in the first place.
As a result, Gemini’s lawyers request that the court decide for themselves if the SEC’s complaint(s) match the criteria for a valid lawsuit. Assuming the court arrives at the same conclusion as Gemini, the crypto platform requests that the case be dismissed.
The request will be revised by the SDNY and commented on at a later date.
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