U.Today - Gemini, a leading cryptocurrency exchange, in support of its motion to dismiss the U.S. Securities and Exchange Commission's (SEC) complaint against it.
The SEC's lawsuit alleges that Gemini's crypto asset lending program, Gemini Earn, constitutes an offer and sale of securities. However, Gemini's legal team contends that the SEC hasn't adequately identified what constitutes the security in question.
The recent underscores the legal distinction between the issuance of a "security" and the "sale" of said security. This distinction is foundational to Gemini's argument, suggesting that the SEC has not convincingly alleged that a sale of security took place.
The defense leans on precedent, specifically referencing . The court, in the Ripple case, emphasized the importance of analyzing the "totality of circumstances surrounding the offers and sales of the underlying asset" when employing the Howey test, which determines what constitutes a security.
This July ruling, which prompted a huge XRP rally, differentiates tokens sold directly to institutional buyers from those offered to the general public via secondary markets.
However, , one district court has voiced disagreements with the initial Ripple order, Ripple CTO David Schwartz has downplayed the significance of this opposing perspective.
Meanwhile, the crux of the Gemini dispute is whether a sale, as defined by the Securities Act, has been properly alleged by the SEC. Gemini seems to challenge the SEC's allegations, arguing that the regulator hasn't provided sufficient evidence or clarity on the specifics of the sale in question.