Genesis Global Holdco, which is going through bankruptcy proceedings, and the Gemini bitcoin exchange filed a petition with the court to reject the initiated SEC lawsuit against their joint Earn program.
In January 2023, the Commission accused the partners of selling unregistered securities. The lawsuit confirmed media reports that Genesis Global Holdco owed $900 million to exchange customers. The interests of 340,000 investors were affected.
At the time, Gemini co-founder Tyler Winklevoss called the SEC allegations “super flimsy” and “a trumped up penalty ticket.”
In the current filing, the companies noted that the SEC’s treatment of the Tripartite Digital Asset Loan Agreement (MDALA) between Genesis, Gemini and Earn users as an unregistered security “has no basis in law or fact.”
Lawyers stressed that the SEC was unable to “properly prove” that the MDALA is an investment contract, as well as provide convincing evidence for claims that the agreements were distributed to third parties.
Recall that in May, Digital Currency Group (DCG, the parent company of Genesis) delayed a payment of $ 630 million as part of the compensation to users of Gemini Earn.
Previously, DCG, Genesis, the committee of creditors of the crypto lending platform and the exchange agreed to launch a 30-day pre-trial reconciliation process.
The parties are striving to find an acceptable solution to the Genesis agreement proposed in February 2023 with creditors, according to which the latter will be able to return 80% of the lost funds. The agreements provided for the gradual zeroing of the Genesis loan portfolio and the sale of insolvent structures.
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