Cryptocurrency exchange Gemini is seeking to dismiss a complaint filed against it in January by the U.S. Securities and Exchange Commission (SEC) over an alleged unregistered securities offering. A memo filed on Aug. 18 in support of Gemini's motion to dismiss asserts that the SEC has failed to identify both the security and the supposed sale or offering of the security.

The SEC has not been able to show "the existence of a security" or the "sale of 'such security," Jack Baughman, a founding partner of JFB Legal, said in an Aug. 18 post on X. "The SEC is floundering," Baughman said in the post. "They can’t even decide what the security is."

Baughman criticized the SEC for levying what he said were spurious claims at crypto exchanges, saying that they hurt the public as well as the crypto industry. "I have been litigating for 30 years," Baughman said in the post.

"It doesn’t bother me when private parties make ridiculous arguments," he wrote. "Judges swat them down. But it is something else entirely for the government to take outlandish positions. The truth is that the government gets the benefit of the doubt from most judges, and its arguments will get more attention than they otherwise deserve. There is deference in how agencies interpret the statutes they administer. That is why it is so wrong for the SEC and other regulators to be 'pushing the envelope' and trying to win cases no matter what. That is not their role, and it harms the public and the market. They have a duty to everyone, including those they litigate against. The current crop of regulators in Washington has lost the plot," he said.

SEC Chair Gary Gensler had said in a January 12 news release, when the SEC lawsuit was filed, that "Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”