Gemini Vs SEC: When Will the Blame Game Stop!

Gemini Vs SEC: When Will the Blame Game Stop!

Time Stamp: July 3, 2023 4:28 AM
Source Node: 2156319

In a fascinating turn of events, Gemini, a prominent cryptocurrency company, has locked horns with the U.S. Securities and Exchange Commission (SEC). The narrative is strewn with fiery tweets, accusations of a “failed regulator”, and a potential lifeline for disgruntled investors, all adding layers to this unfolding saga.

The Spark that Ignited the Fire

It began with a tweet from Cameron Winklevoss, co-founder of Gemini. Celebrating the tenth anniversary of the first Bitcoin ETF filing, Winklevoss took the opportunity to castigate the SEC. He labeled the institution a “complete and utter disaster” for U.S. investors, blaming its refusal to approve Bitcoin ETFs as detrimental to investor interests.

Winklevoss pointed to several alleged shortcomings of the SEC. His list included “protecting” investors from Bitcoin, the top-performing asset of the past decade, and pushing them towards “toxic products” such as the Grayscale Bitcoin Trust (GBTC).

Winklevoss also alleged that the SEC’s actions had driven Bitcoin activity offshore to unregulated venues and led investors into the arms of FTX, a company he labeled as one of the largest financial frauds in modern history.

Former SEC Chief Fires Back

John Reed Stark, former Chief of the SEC Office of Internet Endorsement, was quick to respond. Stark likened Gemini’s blame game with the SEC to several outrageous scenarios, including Lee Harvey Oswald blaming the U.S. Secret Service for depriving people of the right to see the President up close. He emphasized the irony of Gemini blaming the SEC when the company itself stands accused of swindling $900M from 340,000 investors through its EARN product.

The Silver Lining for Gemini’s Investors?

Despite the back-and-forth accusations, Stark offered a glimmer of hope to Gemini’s EARN investors. He highlighted that in contrast to companies like FTX, Celsius, BlockFi, and Voyager, Gemini is a solvent. This means that if the SEC wins its case against Gemini, there’s a chance for investors to recover some, or even all, of their original investment.

The SEC penalties and disgorgement could be placed in a FAIR Fund or similar remediation mechanism, and returned to victims of any violative conduct. He referenced the SEC Telegram case, where Telegram returned $1.2 billion to investors after settling the SEC’s charges, as an example of such reimbursements.

Gemini’s Potential SEC Troubles on The Horizon

Stark expressed surprise that the SEC didn’t charge Gemini with failing to register as an exchange, a broker-dealer, or a clearing firm, as it had done with other crypto platforms like Beaxy, Bittrex, Binance, and Coinbase. This query added another level of twist to the unfolding Gemini-SEC saga.

While Gemini has sought to dismiss the SEC case against them, the resolution may be a while off. However, Stark is adamant that if the SEC wins, it could be good news for EARN’s investors, despite Gemini’s opposing view.

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