The U.S. Securities and Exchange Commission has dismissed, with prejudice, its civil enforcement action against Gemini Trust Company, the cryptocurrency platform backed by billionaires Tyler and Cameron Winklevoss, in litigation over the now-defunct Gemini Earn crypto lending program.
The joint stipulation filed January 23 in the U.S. District Court for the Southern District of New York ends the SEC’s nearly three-year lawsuit.
What Happened
In a court filing, the SEC said it was dismissing the case “in the exercise of its discretion,” noting as a key factor the “100 percent in-kind return of Gemini Earn investors’ crypto assets” and state and regulatory settlements relating to the Earn program.
The dismissal “does not necessarily reflect the Commission’s position on any other case.”
The original complaint, filed January 12, 2023, alleged that Gemini and its partner Genesis Global Capital offered and sold unregistered securities to U.S. retail investors through the Gemini Earn program, where customers loaned crypto assets to Genesis in exchange for interest.
The SEC said this constituted the unregistered offer and sale of securities in violation of federal law.
What Was Gemini Earn?
Gemini Earn was launched in 2021 and marketed as a way for customers to earn yield on cryptocurrency holdings, with annualized returns advertised on tens of thousands of assets.
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Genesis pooled and deployed those assets in institutional lending activities, generating revenue to pay interest to investors.
By late 2022, market volatility prompted Genesis to halt withdrawals, leaving roughly $900 million of customer crypto locked up and leading to Genesis’s bankruptcy filing.
Why It Matters
The litigation was one of several high-profile enforcement actions by the SEC targeting crypto lending and yield products.
Separate regulatory actions also included state level lawsuits and settlements; for example, New York’s attorney general secured digital asset recoveries for thousands of Gemini Earn investors and barred Gemini from crypto lending, and Gemini agreed to return more than $1 billion to users in other regulatory settlements.
Genesis itself settled with the SEC in March 2024, agreeing to a civil penalty and injunction without admitting wrongdoing.
The dismissal with prejudice means the SEC cannot refile the same claims in this matter, providing legal closure for Gemini amid broader shifts in U.S. regulatory treatment of cryptocurrency firms.