Key Takeaways
- SEC and Gemini strike preliminary deal to end a three-year lawsuit over the Earn program.
- Gemini and Genesis were accused of offering unregistered securities through crypto lending.
- Settlement underscores shifting SEC policy between administrations over the past five years.
After nearly three years of legal wrangling, Gemini Trust, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has reached a preliminary settlement with the U.S. Securities and Exchange Commission (SEC).
The case centered on Gemini’s defunct Earn program, a retail crypto lending product that became one of the most high-profile flashpoints in the SEC’s broader crackdown on digital assets.
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SEC Ends Earn Program Case
In a joint letter filed Monday in Manhattan federal court, attorneys for both the SEC and Gemini confirmed that they had reached a “resolution in principle” to fully resolve the case.
The settlement remains subject to final SEC approval, but both sides have asked the court to pause all deadlines until Dec. 15, when a status update will be due if the deal is not finalized earlier.
The lawsuit, first brought in January 2023, alleged that Gemini and its partner, Genesis Global Capital, offered and sold unregistered securities through Earn, a program launched in 2021 that promised retail investors interest rates as high as 7.4% APY on deposits of Bitcoin and other cryptocurrencies.
At its peak, Earn managed roughly $900 million in assets across 340,000 accounts.
From Gensler Crackdown to Trump-Era Shift
The Gemini lawsuit was part of a broader enforcement-heavy approach under former SEC Chair Gary Gensler, who argued that most crypto tokens and yield-bearing services constituted securities and should fall under existing laws.
Gemini’s Earn program, along with Kraken’s staking service, became emblematic of that push.
But the regulatory climate has shifted under the Trump administration.
The SEC has scaled back enforcement-first tactics and signaled a willingness to pursue clearer legislation instead of piecemeal lawsuits.
The move to settle with Gemini is part of the SEC’s new pivot toward regulatory engagement with crypto platforms.
Implications for Investors
As part of its restructuring, Gemini has pledged to return approximately $1.1 billion to Earn participants, pending resolution of Genesis’s ongoing bankruptcy proceedings.
While the settlement offers long-awaited closure for investors caught in the program’s collapse, it also reinforces the risks surrounding yield-bearing crypto products, which have faced heightened scrutiny since 2022’s market downturn.
For the broader industry, the case’s resolution may serve as an inflection point: a sign that regulators are willing to move past blanket enforcement actions and toward a more defined set of rules for crypto lending and staking.
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