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Gemini Settles With SEC Over Earn Lending Program

TL;DR

• SEC Settlement Finalized: Gemini and the SEC agreed to fully resolve the Earn lawsuit, with final paperwork due by December 15, ending nearly two years of litigation.
• Customer Funds Impacted: Genesis bankruptcy left 340,000 Earn users unable to access $900m in crypto assets, highlighting systemic risks in lending models.
• Policy Shift Evident: The SEC’s softer stance under Trump signals openness to negotiated outcomes despite steep penalties.
  

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Gemini has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over its controversial Earn lending program, marking the end of a nearly two-year legal battle. The agreement, disclosed in a Manhattan federal court filing, awaits final approval by the commission, with paperwork due by December 15. The resolution follows a broader shift in regulatory tone under President Donald Trump’s administration.

SEC Lawsuit and Earn Program Origins

The SEC sued Gemini and Genesis Global Capital in January 2023, alleging they offered unregistered securities through the Earn program. This initiative allowed customers to lend crypto assets for interest, attracting $900m from 340,000 users at its peak. Gemini routed customer assets to Genesis, which paid interest while Gemini collected fees up to 4.29%. The SEC claimed this structure lacked required disclosures, violating federal securities laws.

Fallout from FTX and Genesis Bankruptcy

Genesis froze withdrawals in November 2022 following the collapse of FTX, triggering a liquidity crisis. By January 2023, Genesis filed for bankruptcy, leaving Earn investors unable to access their funds. The SEC’s case against Genesis concluded earlier this year with a $21m settlement, though the firm did not admit wrongdoing. Gemini, meanwhile, maintained its denial of the allegations throughout the proceedings.

Winklevoss Strategy and IPO Timing

Founded in 2014 by Tyler and Cameron Winklevoss, Gemini has long positioned itself as a compliant, mainstream crypto exchange. The twins, each worth an estimated $4.6B, have contrasted Gemini’s practices with riskier competitors. The settlement news came shortly after Gemini’s $425m initial public offering, valued at $3.3B. Shares rose to $32.52, a 16% gain over the IPO price of $28.

Regulatory Shift and Industry Implications

Since President Trump took office, the SEC’s decision to settle reflects a broader softening in its approach to crypto enforcement. Acting chair Mark Uyeda previously signaled leniency by declining further action in a separate Gemini inquiry. For the industry, the Gemini resolution suggests that while penalties remain significant, regulators may be more open to negotiated outcomes, offering a path forward amid evolving U.S. policy.