Gemini has taken a significant step in countering the lawsuit brought against it by the SEC. The case revolves around allegations that Gemini Earn, a service enabling users to lend cryptocurrencies, violated securities regulations by offering unregistered securities. In response, the exchange has filed court documents strongly contesting the SEC’s claims, highlighting the lack of clarity in the case.

Gemini Challenges the SEC’s Case

Gemini (Source: The Block)
Source: The Block

Gemini’s reply brief, filed on August 18 in the U.S. District Court for the Southern District of New York, puts forth a robust defense against the SEC’s allegations. The exchange argues that the SEC has failed to present a clear and solid case, particularly when it comes to interpreting “Section 5 of the Securities Act.”

Read more: Gemini Files Reply Memorandum to Dismiss SEC Lawsuit

The exchange contends that the SEC’s inability to precisely define the security in question raises doubts about the strength of its position. The exchange suggests that the court should simplify the matter by asking direct and uncomplicated questions to determine whether the alleged breach qualifies as a security. Key aspects under scrutiny include the timing of the supposed security sale, the identities of the buyer and seller, and the price involved.

Pinpointing the Unregistered Security & Changing SEC Stance

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Gemini asserts that the SEC must first identify the unregistered security before establishing any associated sale or offer. According to the exchange, the SEC has fallen short of this fundamental requirement. The filing argues that the SEC’s opposition “avoids the question before the court.”

Jack Baugham, a founding partner of JFB Legal representing Gemini, highlighted the SEC’s evolving stance in response to the lawsuit. Baugham pointed out that the SEC’s confusion about the nature of the security being referred to weakens its argument. The contradictory positions taken by the regulator, such as labeling the Loan Agreement as a security while also categorizing the entire Gemini Earn program as a security, are viewed as contradictory and puzzling.


Gemini’s reply brief stands as a strong rebuttal to the SEC’s lawsuit, emphasizing the exchange’s belief that the agency has not clearly established its case regarding the alleged breach of securities regulations by the Gemini Earn service. The exchange’s argument hinges on the SEC’s lack of clarity about the nature of the security in question and its inconsistent claims, which cast doubt on the legitimacy of the lawsuit.

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