Gemini Responds to SEC Lawsuit Over Alleged Unregistered Securities

Cryptocurrency exchange Gemini has filed a reply brief in response to a lawsuit initiated by the United States Securities and Exchange Commission (SEC). The lawsuit, which is being heard in the U.S. District Court for the Southern District of New York, alleges that Gemini’s service, Gemini Earn, violated securities regulations by offering “unregistered securities.”

A Robust Defense

Gemini’s legal defense, represented by firms JFB LEGAL, PLLC, and SHEARMAN & STERLING LLP, has been robust. The reply brief, dated August 18, 2023, challenges the SEC’s claims, arguing that their complaint is based on “conclusory statements” and lacks concrete evidence. Specifically, Gemini’s defense has highlighted the SEC’s failure to answer pivotal questions, such as when the alleged security was sold, who were the buyer and seller, and at what price it was offered.

Gemini Earn at the Center of Controversy

The core of the lawsuit revolves around the Gemini Earn service, which facilitates customers in lending crypto assets like Bitcoin to Genesis. The SEC asserts that this service breached securities regulations. However, Gemini has consistently contested this claim. On May 27, the exchange posited that transactions within the Gemini Earn program were essentially loans, urging the SEC to dismiss the complaint based on this perspective.

Adding to the public discourse, Jack Baugham, a founding partner of JFB Legal, made a statement highlighting the inconsistent nature of the SEC’s arguments. He described the regulator’s approach as “floundering” and emphasized the contradictory facets of their claims.

Previous Legal Challenges

Earlier in the year, the legal waters were further muddied when US regulators initiated a lawsuit against both Gemini and Genesis Global Capital, alleging unregistered securities trading through the Gemini Earn program. This was compounded by accusations from investors against Gemini and its co-founders, alleging fraudulent activities.

In an official blog post, Gemini addressed the lawsuit, terming it “ill-conceived.” They underscored the clarity of “Section 5 of the securities act” and criticized the SEC for their ambiguous stance on the matter.

The Downfall of Gemini Earn

Genesis served as the primary lender for the Gemini Earn program, which once boasted an impressive annual return of over 8%. Digital Currency Group (DCG) borrowed a significant $1.65 billion from Genesis and subsequently channeled these funds primarily to Three Arrows Capital and the cryptocurrency exchange FTX. Unfortunately, both entities declared bankruptcy in 2022, leading to challenges for Gemini Earn users in retrieving their investments.

For transparency, the Gemini Earn website has been consistently updated with unfolding events. As of August 18th, the website reported that mediation sessions were held on August 16th and 17th, with Genesis extending the mediation to August 23rd. Gemini has voiced concerns over the prolonged negotiations with DCG, aiming to ensure fair compensation for Genesis’s creditors, including Earn users. DCG defaulted on a payment of $630 million due to the Genesis bankruptcy estate between May 9th and 11th.

Despite facing a motion by DCG and its CEO, Barry Silbert, to dismiss a lawsuit alleging them of fraud, Gemini claims to remain steadfast in its stance. They are set to respond to this motion by September 14th. On a positive note, Genesis has brokered a settlement agreement with the FTX estate, reducing FTX’s claim from $3.7 billion to $175 million against Genesis, promising better recoveries for all affected creditors.

Image source: Shutterstock


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Gemini’s Weekly Update: PayPal Launches PYUSD Stablecoin, Coinbase Unveils Base Layer-2, and Aptos Announces Microsoft Partnership

In Gemini’s latest “Weekly Market Update” released on August 11, 2023, several significant developments were highlighted in the cryptocurrency industry, marking a week filled with innovation and collaboration.

As of Friday, August 11, 2023, PayPal has become the first significant US financial firm to introduce its own US dollar-backed stablecoin, PayPal USD (PYUSD). The extension of PayPal’s crypto services, which currently include trading in Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC), includes this latest addition.

Stablecoins are now the “killer application” for blockchain, according to PayPal Senior Vice President and General Manager of Blockchain, Crypto, and Digital Currencies Jose Fernandez da Ponte, and are “something we cannot just sit out.”

Other Notable Market Updates

Inflation for July 2023 Was Lower Than Expected: Inflation for July 2023 was lower than expected, with both the headline and core consumer price statistics recording a minor rise of 0.2%. This results in annual increases for the corresponding categories of 3.2% and 4.7%. Market experts predict that interest rates will likely stay steady for the rest of the year as a result of the lower inflation statistics.

Coinbase’s Base Layer-2 Network Goes Live: Coinbase launched its Ethereum layer-2 network, Base, to the general public, with data showing $175 million USD locked on the blockchain as of Friday. This follows Coinbase’s better-than-expected second quarter earnings of $708 million USD in revenues.

Aptos Surges on Microsoft Partnership: Aptos (APT), a layer-1 proof-of-stake blockchain, saw a ~15% surge in price on Wednesday after announcing a partnership with Microsoft to work on AI and web3 products and services. The collaboration will leverage Microsoft’s Azure OpenAI services.

Bitcoin and Ether Continue Range Bound: Bitcoin traded in the $29k to $30k USD range for the second week, possibly boosted by PayPal’s stablecoin launch. Ether has been struggling to move back above its 100-day moving average of $1,850 USD.

Crypto Custody Explained

The update also touched on the importance of crypto custody, outlining different options for investors, including self-custody via private keys, partial custody with third-party assistance, and third-party digital asset custody. The latter offers high levels of security and is suitable for individual and institutional investors.

Image source: Shutterstock


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Gemini Is Giving Away 4,000 Ripple XRP Every Day at 3 pm EST

Gemini, a leading U.S.-based exchange, has unveiled a limited-time giveaway of 4,000 XRP tokens each day. The announcement, made via an official tweet that reads, “We’re giving away 4,000 XRP! Every day at 3pm EST. Introducing: The XRP Faucet,” has already seen its first giveaway close just two hours after being made public.

Dubbed the “XRP Faucet,” the giveaway began on August 11, 2023, at 3:00 pm ET and is slated to conclude on August 18, 2023, at 11:59 pm ET. According to the terms and conditions delineated on Gemini’s official website, eligibility for participation requires being a legal resident of the United States, a minimum age of 18, and possession of a verified Gemini account. The offer, restricted to one per verified customer per day, operates on a first-come, first-serve basis.

The decision by Gemini to relist Ripple XRP for trading emerged as a strategic response to Ripple Labs’ partial triumph against the United States Securities and Exchange Commission (SEC) on July 13, 2023. This marketing initiative aligns with the exchange’s broader strategy, as underscored by the Twitter announcement that “$XRP is now available for trading on Gemini.”

The relisting’s impact on XRP’s price on Gemini was both immediate and pronounced, propelling it to $50 from a paltry $0.636, a phenomenon that stood in stark contrast to the stable price of $0.63 on other exchanges, including Binance and OKX.

Gemini’s terms and conditions for the giveaway articulate the right to modify or terminate the offer at their discretion. Furthermore, the exchange holds exclusive authority over the timing of the offer’s inception and conclusion, as well as any affiliated promotions. The offer stands void in jurisdictions where it is either restricted or deemed unlawful.

The XRP giveaway by Gemini is more than a fleeting marketing event; it marks a significant moment in the exchange’s strategy to engage users and leverage the renewed interest in XRP following recent legal developments. Those intrigued by the giveaway would be well-advised to scrutinize the terms and conditions to ascertain their eligibility.

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Gemini Co-founder Marks Spot Bitcoin ETF Approval Struggle for A Decade

The 10-year anniversary of the day that Cameron Winklevoss and his brother Tyler filed for the top slot in the first Bitcoin Exchange-Traded Fund (ETF) was celebrated today by the co-founder of the cryptocurrency exchange Gemini. The businessman took the opportunity to lambast the Securities and Exchange Commission (SEC) of the United States for its ongoing refusal to approve such items. He claimed that this hesitation has proven to be harmful to American investors.

The Winklevoss brothers think that the SEC’s efforts have harmed investors more than they have helped them, especially by preventing them from investing in Bitcoin, the asset that has performed the best over the previous ten years.

The SEC’s opposition to approving Bitcoin ETFs, according to Cameron Winklevoss, has instead led investors to “toxic products” like the Grayscale Bitcoin Trust (GBTC). He emphasised the problems with GBTC, such as the enormous discount to Net Asset Value (NAV) and the extremely high fees.

Furthermore, he emphasised how this regulatory impasse has prompted spot Bitcoin activity to move overseas. Winklevoss claims that as a result, dangers for investors have increased because they are now dealing with unregistered and unregulated venues.

One significant result highlighted by Winklevoss was the fact that investors are now turning to platforms like FTX as a result of the SEC’s denial. He argues that because of this, they have been the victims of one of the biggest financial frauds in contemporary history.

Winklevoss urged the SEC to consider its record in a call to action. He advised the SEC to concentrate on carrying out its mandate rather than exceeding its statutory authority and serving as an economic life gatekeeper. This includes promoting fair and orderly markets, protecting investors, and assisting with capital development.

His concluding remarks showed his support for those who are still fighting for U.S. spot Bitcoin ETFs. It is evident that the Winklevoss brothers are still dedicated to their goal despite their ten-year battle, indicating a continuing difficulty for regulators. 


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Gemini Co-founder Tyler Winklevoss Shares Excitement about Hong Kong’s Crypto Leadership

Hong Kong is now positioning itself as a leading force in the world of cryptocurrency. During Gemini’s global tour, co-founder Tyler Winklevoss had an insightful meeting with Hong Kong’s regulatory authority for crypto, the SFC (Securities and Futures Commission). Expressing his enthusiasm, Winklevoss took to Twitter to share his thoughts on the city’s thoughtful and clear approach to crypto regulation.

Winklevoss tweeted, “Hong Kong is ready to lead in crypto. Had a great meeting w/ the SFC — HK’s regulator for crypto — during @gemini’s world tour. Very encouraged w/ their thoughtful & clear approach. Many imp industry players making HK home and a vibrant ecosystem is developing here. Exciting!”

Highlighting the collaborative nature of the crypto community, Winklevoss also mentioned an enjoyable dinner with Hong Kong’s crypto builders. The gathering was hosted by Martin, a representative from CMCC (China Mobile Communications Corporation), along with the team from CMCC Global. Winklevoss expressed his admiration for CMCC Global, acknowledging it as one of the best funds in the entire crypto industry. He further appreciated their focus on achieving returns rather than seeking excessive PR and publicity. Gemini’s Frontier Fund proudly counts itself as an investor in CMCC Global.

During his visit, Winklevoss took the opportunity to explore the vibrant streets of Kowloon, a district known for its energy and futuristic vibe. Comparing the experience to being on the frontier, he described Kowloon as edgy, gritty, and cool, reminiscent of a sci-fi movie. Winklevoss accompanied his tweet with a series of photos, featuring two snapshots from a previous visit in 2018 and a third image captured during his recent trip, showcasing the dynamic atmosphere of the city.

As Hong Kong solidifies its position as a hub for the crypto industry, the positive sentiment expressed by Tyler Winklevoss and other prominent players underscores the city’s growing significance in the global crypto ecosystem. With its progressive regulatory approach and a diverse range of industry participants, Hong Kong appears set to take on a pivotal role in shaping the future of cryptocurrency.


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Gemini Launches ETH & MATIC Staking Services in Switzerland and Turkey Amidst U.S Regulatory Crackdown on Crypto Staking

Crypto exchange Gemini has announced the expansion of its staking services to users in Switzerland and Turkey. The development comes at a time when United States-based exchanges face regulatory hurdles with the Securities and Exchange Commission (SEC) regarding similar services.

The launch was announced through the company’s Tweet, which noted that customers could now stake Ethereum (ETH) and Polygon (MATIC) in the two countries. The move aims to provide investors with new opportunities to earn rewards and enhance network functionality.

Gemini’s move follows a recent trend of U.S-based cryptocurrency exchanges exploring opportunities in regions with more relaxed regulatory environments. The trend was sparked by recent actions taken by the SEC against cryptocurrency exchanges providing staking services in the U.S.

Earlier this year, the SEC charged Kraken for failing to register its staking-as-a-service program. Coinbase, another industry giant, faced similar charges for operating an unregistered trading platform and offering an unregistered crypto asset staking service.

Staking is a process that involves participating in a proof-of-stake (PoS) blockchain network by holding and “staking” cryptocurrency in a digital wallet to support network operations like block validation and transaction processing. In return, stakeholders earn rewards, usually in the form of additional tokens.

As U.S. regulations tighten on crypto-asset staking programs, exchanges like Gemini seem to be navigating these regulatory waters by extending these services to jurisdictions where they are permitted. The unfolding situation underscores the ongoing tension between crypto platforms and regulators as the industry continues to evolve.

With its latest move, Gemini continues to assert its commitment to providing its users with a wide range of investment options while working within the boundaries of varying global regulations. The new staking services in Switzerland and Turkey serve to increase Gemini’s reach and make cryptocurrency investment opportunities more accessible to users in these regions.


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Democrats may lose youth votes over anti-crypto sentiments, warns Winklevoss

Gemini co-founder Cameron Winklevoss has warned that the Democratic Party risks losing crucial support from younger voters due to what he perceives as an aggressive stance on cryptocurrencies by notable figures within the party. In a series of tweets, Winklevoss asserted that Democrats are alienating Millennials and Generation Z—groups which, he says, have wholly embraced the emerging asset class.

“Winning the youth vote w/ ‘get out the vote’ is a key part of the Democratic playbook,” he tweeted. “Dems believe the youth vote will carry the day.”

However, Winklevoss posited that this essential demographic, which could swing the balance of power in future elections, is at risk due to the party’s approach to cryptocurrencies. He points to Senator Elizabeth Warren and Securities and Exchange Commission (SEC) Chairman Gary Gensler as the main culprits behind what he sees as an unjust war against crypto. Recently, the Securities and Exchange Commission (SEC), led by Gary Gensler, has brought charges against major cryptocurrency exchanges Binance and Coinbase, alleging that certain coins, such as Matic and SQL, are securities. Following these actions, there was a significant crash in altcoin prices over the weekend.

“Crypto has already won the hearts and minds of Millennials and GenZ,” Winklevoss noted. “They don’t debate the merits of crypto. They debate where and what to build next.”

Winklevoss also mentioned the large number of young investors who have bet their life savings on cryptocurrencies. In his view, they will not forget any value destruction that they perceive as having been caused by Warren and Gensler.

In a conclusion that might send ripples through the political sphere, Winklevoss questioned the motives and understanding of the party’s establishment: “Two explanations: (1) the blue establishment either doesn’t understand what’s going on w/ Warren and Gensler or (2) are grossly miscalculating the impact of their actions on the youth vote this upcoming election cycle.”

As the political and regulatory landscapes around cryptocurrencies continue to evolve, these comments add another layer to the debate. They highlight the potential implications not only on financial markets but also on the political attitudes of younger generations who have been found to be increasingly supportive of decentralized finance. With an upcoming election cycle, the Democratic Party’s approach to this issue may indeed have far-reaching consequences.


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Gemini Launches Offshore Derivatives Platform

Gemini, the US-based cryptocurrency exchange, has announced the launch of a derivatives platform outside the United States. The new platform, called Gemini Foundation, will provide services to customers based in over 30 countries, including Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, and the British Virgin Islands, among others. This move is seen as a response to the tightening regulatory environment for crypto firms in the United States.

Gemini Foundation’s first derivatives contract will be a Bitcoin perpetual contract denominated in Gemini Dollar (GUSD). This will be followed by an ETH/GUSD perpetual contract shortly after. Eligible customers will be able to trade both spot and derivatives products and convert US dollars and USD Coin into GUSD on a 1:1 basis. Fees, profits, and losses will also be processed in GUSD. The default leverage on the platform is 20x, with the maximum leverage being 100x.

Perpetual futures trading is not regulated by the Commodity Futures Trading Commission, and exchanges offering crypto futures contracts, like BitMEX, are not available for US customers. Gemini Foundation will not offer services for customers in the United States.

The launch of the offshore derivatives platform comes just a few days after Gemini revealed plans to establish a new engineering hub in India. Gemini’s founders, Tyler and Cameron Winklevoss, have stated that the exchange has “big plans for international growth this year in APAC.” Earlier this month, Gemini filed a pre-registration with the Ontario Securities Commission to become a restricted dealer in Canada.

Gemini has been scrutinized by US authorities, with the New York State Department of Financial Services reportedly investigating the exchange over claims that many users had believed assets in their Earn accounts were protected by the Federal Deposit Insurance Corporation. Gemini’s Earn program halted withdrawals in November after its operating partner, Genesis, cited “unprecedented market turmoil.” In January, the firm filed for Chapter 11 bankruptcy. Reports at the time suggested that up to $900 million in Earn user funds could have been locked. The US Securities and Exchange Commission also charged the exchange with offering unregistered securities through Earn in January.

In light of these controversies, Gemini’s move to launch an offshore derivatives platform seems to be a strategic attempt to expand its business and distance itself from the regulatory scrutiny in the United States. The launch of Gemini Foundation is a significant step for the company, which has been expanding its services and geographical reach in recent years. With the new platform, Gemini is positioning itself as a player in the global derivatives market, targeting customers in countries where regulatory frameworks are more favorable.


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Twitter and Alibaba Enter Global AI Race

In the rapidly evolving world of technology, artificial intelligence (AI) has become a focal point for many companies. Twitter and Alibaba have reportedly joined the global AI race by integrating the technology into their businesses. Twitter plans to use AI to “detect & highlight manipulation of public opinion,” while Alibaba is developing its own chatbot assistant called Tongyi Qianwen.

Meanwhile, the co-founders of cryptocurrency exchange Gemini, Tyler and Cameron Winklevoss, have funded their business with a personal loan of $100 million. The move comes after previous attempts to raise capital from external investors failed. The Winklevoss brothers are funding Gemini amid regulatory scrutiny in the United States, including charges from the Securities and Exchange Commission related to the exchange’s Earn program.

In addition, MetaMask has launched a new feature that allows users to purchase cryptocurrency with fiat currency directly from its Portfolio Dapp. The service is available in over 189 countries and accepts debit and credit cards, PayPal, bank transfers, and instant ACH. MetaMask claims the service follows local regulations and takes the user’s location into account.

The integration of AI into businesses is not without controversy. Twitter CEO Elon Musk, who recently purchased nearly 10,000 graphics processing units (GPUs) for the platform, previously spearheaded a letter calling for the halt of advanced AI development due to societal concerns. However, many companies see the potential benefits of AI and are investing heavily in the technology.

In the cryptocurrency world, the Winklevoss brothers’ loan to Gemini underscores the challenges that exchanges face in a volatile market and amid regulatory scrutiny. However, the loan also highlights the dedication of entrepreneurs to build a successful business in the face of adversity.

Meanwhile, MetaMask’s new feature for purchasing cryptocurrency with fiat currency is a welcome addition for many users who find it challenging to navigate the complex world of cryptocurrency exchanges. The service’s availability in over 189 countries and its acceptance of a wide range of payment methods make it an attractive option for those looking to invest in cryptocurrency.

Finally, Alibaba’s entry into the AI race with its chatbot assistant underscores the company’s commitment to innovation and its vast ecosystem of tech businesses. As the world becomes increasingly reliant on technology, the integration of AI into businesses will likely continue to be a significant trend. However, companies must balance the potential benefits of AI with the societal concerns surrounding the technology.


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Winklevoss Twins Fund Gemini Amid Crypto Downturn

The Winklevoss twins, co-founders of Gemini, have reportedly loaned their own money to support the cryptocurrency exchange during a period of market downturn. This news comes amid increased scrutiny from regulators, with both the U.S. Securities and Exchange Commission and the New York Department of Financial Services investigating Gemini’s activities.

In January, the SEC charged Gemini and Genesis Global Capital with offering unregistered securities through the exchange’s Earn program. Additionally, the New York Department of Financial Services launched an investigation following reports that users claimed assets in their Earn accounts had been given FDIC protection.

Following the announcement of the charges, Tyler Winklevoss accused the SEC of issuing a “manufactured parking ticket,” claiming that Gemini staff had been in talks with the regulator for over a year prior to the enforcement action. This mirrors the complaint of Coinbase, another cryptocurrency exchange whose legal officer claimed that the company met with the SEC more than 30 times over nine months before receiving a Wells notice.

Despite these challenges, the Winklevoss twins remain committed to Gemini and have put their own money into the exchange to ensure its continued success. Gemini has a strong reputation in the cryptocurrency industry, and the twins’ decision to support the exchange during a difficult time is a testament to their dedication to the platform and its users.

Gemini was founded in 2014 and has since become one of the most popular cryptocurrency exchanges in the United States. The exchange is known for its robust security measures and commitment to regulatory compliance, making it a trusted platform for users seeking to buy and sell digital assets.

The Winklevoss twins are also well-known figures in the cryptocurrency world, having made headlines for their involvement in the early days of Bitcoin. The twins famously sued Facebook founder Mark Zuckerberg, claiming he stole their idea for a social networking site. They later used their settlement money to invest in Bitcoin, becoming early adopters of the cryptocurrency and building their fortune in the industry.

In addition to their work at Gemini, the Winklevoss twins are also involved in other cryptocurrency-related ventures, including the digital asset marketplace Nifty Gateway. Their continued involvement in the industry is a positive sign for the future of cryptocurrency, as their support helps to legitimize and strengthen the ecosystem as a whole.

In conclusion, the Winklevoss twins’ decision to fund Gemini with their own money demonstrates their commitment to the exchange and the broader cryptocurrency industry. Despite regulatory challenges and market downturns, the twins remain optimistic about the future of digital assets and are working to build a more robust and secure ecosystem for users.


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