The past week has been eventful for the crypto industry, with Gemini facing allegations similar to Ripple’s from the United States Securities and Exchange Commission (SEC). While both companies deal with regulatory challenges, Ripple remains determined to pursue growth. In Asia, stricter crypto regulations are being implemented, but industry leaders express dissatisfaction with the SEC’s actions in the United States.
Gemini Challenges SEC Allegations
Gemini, a prominent crypto exchange, has decided to challenge the SEC’s accusations that its Earn product offered unregistered securities. This move mirrors Ripple’s legal battle with the watchdog, and it may result in a protracted dispute. On May 26, Gemini launched a robust counterattack against the SEC’s lawsuit, firmly disagreeing with the claims and asserting that the Earn product should not be classified as a security. The company seeks dismissal of the SEC’s lawsuit, which includes disgorgement and a permanent injunction.
Philippines Issues Warning, Gemini Expands
While preparing to battle the SEC, Gemini faced potential setbacks in the Philippines. The country’s regulator issued a warning advising citizens against investing in the Gemini Foundation. The SEC cautioned against Gemini’s derivatives platform, emphasizing the need for proper licensing and authorization. The regulator warned that investing in unregistered derivatives could expose investors to legal and financial risks.
Despite the challenges, Gemini’s founders, the Winklevoss twins, expressed their intentions to expand their business. They engaged with representatives from the Financial Conduct Authority (FCA) and the Bank of England (BoE) to explore opportunities in the United Kingdom. Dissatisfied with regulatory hurdles in the United States, the twins see the UK as a potential market for further expansion.
Gemini Sets Up European Hub in Dublin
Gemini also made the strategic decision to establish its European hub in Dublin, Ireland. By expanding to Ireland, the company aims to navigate the uncertainties of US regulations and leverage Ireland’s supportive tech ecosystem and clear rules. Ireland has become a welcoming environment for cryptocurrencies, attracting major crypto companies and exchanges like Binance and Kraken.
Ripple vs. SEC Legal Battle
Meanwhile, Ripple is still engaged in its legal battle against the SEC. Both parties will submit cross-motions for summary judgments in the coming month. The crypto community closely follows the case’s developments. Attorneys Jesse Hynes and Bill Morgan recently shared their perspectives, hoping that XRP will not be classified as a security. They believe the court should consider the changes in the nature and timing of XRP sales over time. They also suggest that Ripple’s use of XRP for its on-demand liquidity service could support the argument that XRP is not a security.
Legal experts draw parallels between Ripple’s case and LBRY’s dispute with the SEC. LBRY, a platform with its token LBC, is contesting the SEC’s classification of its token as a security in the secondary market. Ripple’s case could be influenced by the outcome of the LBRY case, as the SEC may impose a broad injunction on Ripple and XRP, similar to what happened with LBRY.
In the midst of the legal proceedings, defense attorney Kylie Chiseul Kim, who represented Ripple Labs, filed a motion to withdraw from the case for professional reasons. Ripple will continue to be represented by other lawyers, and it is not expected to impact the outcome of the case.
XRPL Decentralization Debate
Despite the legal battle, Ripple executives are refuting claims that the XRP Ledger (XRPL) is centralized. David Schwartz, Ripple’s CTO and one of the creators of XRPL, defended the blockchain’s decentralization. He explained that the XRP Ledger Foundation, responsible for trusted node listings, does not have the power to impose decisions on the network. Validators on the ledger also lack control or incentives
