[colatkinson]

That case appears to be specific to Gemini Earn, a "staking" product where users would loan Gemini money and in exchange would get returns on that money through Gemini/Genesis's investment of those funds.

Under the Howey test (a security is "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party") this is pretty clearly an unregistered security IMO. Whereas e.g. using Gemini solely to exchange N USD for M BTC with the customer retaining ownership the whole time is probably not. So had the Winklevi stuck to being a traditional exchange, they could have avoided this specific issue.

Of course, the SEC seems to believe that many shitcoins are also securities ("Buy this token for a % share in our company! Totally not equity!" is... not a convincing argument). But that's not what the complaint you linked is actually about.

[Animats]

> That case appears to be specific to Gemini Earn, a "staking" product where users would loan Gemini money and in exchange would get returns on that money through Gemini/Genesis's investment of those funds.

Yes. You put money with them, they invest it, you get some return, maybe. That's unquestionably a security.

Note that there's real staking, as with Etherium validators, where you lock up some Etherium in exchange for a cut of the gas fees. You're still exposed to Etherium going down, but the risk to the principal is low. Then there's fake staking, where you lend someone assets which they then control and invest. That's not "staking", it's an investment deal. A bad deal, because it has a capped upside and an unlimited downside. Someone else thinks that they can get a higher return than you can, but you take the risk if they fail. See Terra/Luna, BlockFi, etc.