SEC seeks to settle Gemini lawsuit as Trump-era crypto shift continues

The Winklevoss twins’ Gemini Trust Co. cryptocurrency exchange is nearing a potential resolution in the U.S. Securities and Exchange Commission (SEC) lawsuit, Securities and Exchange Commission v. Genesis Global Capital LLC, 23-cv-00287, filed in the Southern District of New York (Manhattan). 

This lawsuit alleges that Gemini failed to register its cryptocurrency asset lending program, Gemini Earn, before offering it to retail investors.

Gemini and SEC seek 60-day pause in legal battle over Gemini Earn

In a joint letter filed on Tuesday in Manhattan federal court, the twins’ Gemini Trust and the SEC asked to hold all deadlines in the civil case over Gemini Earn for 60 days to allow the parties to explore a potential resolution.

The letter did not say whether this might entail a settlement, the government agency dropping its case, or some other outcome. Neither Gemini’s nor the SEC’s lawyers immediately responded to requests for comment.

In 2023, the regulatory body filed a lawsuit against Gemini, alleging that the exchange and Genesis Global Capital unlawfully raised billions of dollars in cryptocurrency through the Gemini Earn program.

The program allowed customers to lend crypto assets, including Bitcoin, to Genesis in exchange for interest payments, with Gemini taking a fee as high as 4.29%.

Genesis halted withdrawals in November 2022, the same month Sam Bankman-Fried’s FTX cryptocurrency exchange collapsed. Two months later, it filed for bankruptcy. At the time, it held $900 million of assets from about 340,000 Gemini Earn customers.

According to the SEC, Genesis and Gemini bypassed disclosure requirements meant to protect investors in creating Gemini Earn.

Genesis agreed in March 2024 to pay a $21 million fine to settle, pending the resolution of claims in its Chapter 11 case, without admitting wrongdoing. 

On the other hand, Gemini continues to deny any wrongdoing in relation to the allegations.

SEC shifts crypto regulatory stance under Trump, easing oversight and settling key cases

The SEC has eased oversight of the cryptocurrency industry since Donald Trump became president in January. It is widely expected to remain more supportive of it than under the Biden administration.

In recent weeks, the watchdog has ended civil lawsuits against crypto exchanges Coinbase and Kraken and agreed to settle a case against cryptocurrency company Ripple Labs over the unregistered sale of securities.

Many crypto advocates hailed Trump’s election, hoping for more industry-friendly regulation and less regulatory enforcement. The billionaire Winklevoss brothers, Tyler and Cameron, each donated $844,600 to Trump’s 2024 campaign, the maximum allowed under federal law. According to Forbes, the brothers are each worth $3 billion.

In a separate matter, Gemini reached a settlement with New York regulators, agreeing to return at least $1.1 billion to its customers.

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot