TLDR
- The SEC and Gemini reached a resolution in principle over the Gemini Earn lawsuit.
- The dispute began in 2023, when the SEC accused Gemini of unregistered securities sales.
- Gemini’s legal issue stems from its crypto lending program with Genesis Global Capital.
- The settlement comes after Genesis reached a $21M settlement with the SEC in 2024.
The U.S. Securities and Exchange Commission (SEC) and Gemini have reached a “resolution in principle” in the ongoing legal dispute over Gemini Earn. The SEC had filed a lawsuit in January 2023 accusing Gemini and Genesis Global Capital, LLC of offering unregistered securities through the Gemini Earn program. The program, launched in 2021, allowed customers to lend their crypto to Genesis in exchange for interest payments. The case was one of the SEC’s notable actions aimed at regulating digital asset services.
In a filing with the U.S. District Court for the Southern District of New York on Monday, both parties confirmed the agreement, pending approval from the SEC. The filing also requested the suspension of further court proceedings, pending the finalization of the resolution.
Genesis and Gemini’s Role in the Dispute
Gemini Earn allowed customers to loan their cryptocurrencies to Genesis, a now-bankrupt firm, with returns of up to 7.4% annually. The SEC alleged that the offering was an unregistered sale of securities to retail investors, as Gemini did not register the program with the SEC, nor did it provide all the required disclosures.
The SEC argued that investors lacked material information needed to make informed decisions about their investments in Gemini Earn.
The lawsuit was part of a broader crackdown by the SEC on crypto firms that were allegedly offering unregistered securities products. However, this resolution could mark the end of the litigation against Gemini, provided it passes the SEC’s review process.
Genesis Settlement and Broader Crypto Regulation
The SEC’s action against Gemini and Genesis began after it became clear that the crypto lending model was gaining significant traction among investors. In 2024, Genesis settled with the SEC for $21 million over similar allegations. The resolution of the Gemini case seems to be a step toward winding down the legal issues related to this particular crypto lending model.
Meanwhile, the SEC under the leadership of Paul Atkins, appointed during President Trump’s administration, has shown an increasing focus on creating clearer guidelines for digital asset regulation. This could lead to more settlements with crypto firms as the industry matures and adapts to regulatory demands.
Impact on Gemini and the Winklevoss Twins
The Winklevoss twins, founders of Gemini, have been central figures in this case. Gemini, which recently launched an initial public offering (IPO), raised $425 million in the process.
Despite their ongoing legal challenges, the IPO marked a new milestone for the firm, signaling that it remains a strong player in the crypto space.
The resolution of the lawsuit may help Gemini shift its focus away from legal disputes toward its operations and expansion plans. However, the company’s involvement in high-profile regulatory cases underscores the continuing tension between the crypto industry and regulators.
Political and Legal Developments Around Gemini
In addition to the legal proceedings, the Winklevoss twins have maintained close ties to the White House, particularly with President Trump. Their involvement in U.S. crypto policy has been notable, including supporting the signing of the GENIUS stablecoin bill and advocating for crypto-friendly regulatory changes. This connection has raised questions about how political ties might influence the ongoing regulatory landscape.
Despite these concerns, the resolution of the SEC lawsuit signals a potential shift in how the agency may handle future crypto-related cases. As more firms navigate the regulatory environment, the outcome of the Gemini case may set precedents for how similar disputes are handled moving forward.
