The United States Securities and Exchange Commission (SEC) has moved to conclude its high-profile civil law…

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The United States Securities and Exchange Commission (SEC) has moved to conclude its high-profile civil lawsuit against Gemini Trust Company and Genesis Global Capital regarding the Gemini Earn program. According to court filings submitted in the US District Court for the Southern District of New York, the parties have entered a joint stipulation to dismiss the action with prejudice. This legal maneuver effectively terminates the regulator’s claims that the crypto lending program operated as an unregistered securities offering. The decision to dismiss the case follows a period of negotiation and a significant recovery plan for the affected users of the Earn platform.

Central to the SEC’s decision to drop the litigation was the satisfaction of claims related to investor losses. The agency indicated it was content with the dismissal based on the 100% in-kind return of crypto assets to Gemini Earn investors, which was facilitated through the Genesis bankruptcy proceedings in mid-2024. To bridge any remaining gaps and ensure a full recovery, Gemini agreed to contribute $40 million toward the restoration of assets lost during the collapse of Genesis. This contribution was a primary factor in the SEC’s willingness to end the legal challenge against the Winklevoss-led firm and its former partner.

Context

The legal dispute began in January 2023, a time when the Biden administration was overseeing a significant surge in cryptocurrency-related lawsuits and investigations. This period was characterized by a broad regulatory crackdown on the digital asset industry, with the SEC taking a lead role in targeting various lending and yield-bearing products. The case against Gemini and Genesis was a cornerstone of this enforcement era, focusing on whether the Earn program met the criteria for regulated securities. However, the momentum of the case shifted in April 2024, approximately nine months before the final dismissal, when then-acting chairman Mark Uyeda led the agency to pause the civil action.

While Gemini has now reached this dismissal agreement, its partner in the Earn program, Genesis Global Capital, had already moved to resolve its regulatory liabilities. Genesis previously settled with the SEC by agreeing to pay a fine totaling $21 million. The bankruptcy of Genesis served as the primary vehicle for the distribution of funds back to users, reaching a critical milestone in mid-2024 when the 100% in-kind return was established. The combination of the Genesis settlement and Gemini’s additional $40 million commitment provided the regulator with the necessary grounds to conclude that the objectives of the enforcement action had been met regarding investor restitution.

Impact

The dismissal of the Gemini and Genesis case is not an isolated event but rather part of a documented shift in federal regulatory policy toward the cryptocurrency sector. Since the Trump administration assumed office in January 2025, there has been a notable trend of US government agencies dropping or settling long-standing crypto-related cases. This shift aligns with the administration’s stated goals to deregulate the sector and reduce the volume of litigation that defined the previous years. The end of the Gemini Earn case adds to a growing list of actions involving major industry players that have been reconsidered or abandoned by federal regulators.

• Binance and Kraken have seen similar shifts in their regulatory standing.
• Actions involving decentralized platforms like Uniswap and Immutable have been affected.
• The SEC and other agencies have also pulled back on cases involving Robinhood.
• The NFT sector has seen changes, such as the dismissal of the insider trading case against former OpenSea manager Nathaniel Chastain.

This evolving landscape suggests a transition toward a different oversight model, where previous enforcement actions initiated during the 2023 crackdown are being systematically resolved. For Gemini, the dismissal with prejudice ensures that these specific claims regarding the Earn program cannot be refiled by the SEC, providing a level of legal finality that was previously absent.

Outlook

While the joint stipulation to dismiss the action has been submitted to the court, the final legal conclusion remains dependent on judicial oversight. A federal judge must still sign off on the stipulation to officially end the proceedings in the Southern District of New York. Once this signature is obtained, the SEC’s long-standing claim over the crypto lending program will be legally extinguished. The focus for Gemini now moves toward the final execution of the recovery plan, ensuring that the agreed-upon $40 million contribution is effectively applied to the total pool of assets being returned to the Earn participants.

The resolution of this case marks the end of a significant chapter of regulatory uncertainty for Gemini and the broader lending market. By achieving a 100% in-kind return for investors through the combination of bankruptcy proceedings and direct corporate contributions, the entities involved have established a precedent for resolving high-stakes enforcement actions through total restitution. As the regulatory environment continues to adapt under the current administration’s deregulatory promises, the industry will be watching to see if other pending cases follow the same path toward dismissal or settlement based on investor recovery rather than punitive litigation.