The recent ruling by a federal judge in New York regarding the United States Securities and Exchange Commission’s lawsuit against crypto firms Gemini and Genesis has determined that the case will move forward in court. The SEC has alleged that the Gemini Earn program offered by Gemini and managed by Genesis involved the sale of unregistered securities.

Judge Edgardo Ramos dismissed motions from Gemini and Genesis to dismiss the lawsuit, as well as a separate request to halt the SEC’s actions against them. The judge stated that the SEC’s claims that Gemini Earn met the criteria of an investment contract under the Howey test were plausible.

The SEC’s lawsuit alleges that Gemini Earn offered and sold unregistered securities, with customers expecting profits based on Genesis’ actions. The court found that the agreements in Gemini Earn could be classified as notes, which are debt securities requiring repayment with interest.

While the ruling does not determine the final outcome of the case, it does indicate that there is sufficient evidence for the SEC’s claims to proceed. Both parties will now move forward with gathering evidence for the trial.

In a related development, Genesis recently reached a $21 million settlement with the SEC in a bankruptcy court filing. The SEC’s lawsuit stated that Gemini Earn had a significant customer base and assets under management before facing liquidity issues and suspension of withdrawals.

The legal proceedings surrounding Gemini and Genesis highlight the complexities of regulatory compliance in the cryptocurrency industry. It is essential for companies operating in this field to adhere to securities laws to avoid legal challenges and potential financial repercussions.

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