- Gemini faces a lawsuit over its unregistered cryptocurrency lending program, Gemini Earn.
- The SEC alleges that Gemini and Genesis raised billions unlawfully through Gemini Earn.
- Genesis agreed to a $21 million settlement, while Gemini denies wrongdoing.
The cryptocurrency exchange Gemini Trust and U.S. Securities and Exchange Commission (SEC) filed a joint request to delay the ongoing Gemini Earn program lawsuit for a period of sixty days. Both parties submitted a letter on Tuesday to Manhattan federal court requesting a 60-day pause to examine potential solutions alongside suspending all active deadlines. The letter did not provide specific details on whether this delay could lead to a settlement, case dismissal, or another outcome.
Neither party’s lawyers provided immediate comments, leaving the exact future of the case unclear. The lawsuit, filed in 2023 by the SEC, accused Gemini of offering its Gemini Earn program to retail investors without registering it properly. The SEC claims that Gemini and Genesis Global Capital bypassed crucial disclosure requirements, ultimately raising billions of dollars unlawfully through the program.
Genesis’ Bankruptcy and SEC Allegations
In 2022, Genesis halted withdrawals from its platform in November, the same month FTX collapsed. Two months later, Genesis filed for bankruptcy, holding $900 million in assets from about 340,000 Gemini Earn customers. The SEC’s lawsuit asserts that the failure to register Gemini Earn left investors exposed to potential risks and lacked the necessary protections typically found in registered investment schemes.
Genesis, in March 2024, agreed to pay a $21 million fine to settle its claims, pending the resolution of its bankruptcy case. Genesis did not admit wrongdoing in this settlement. Meanwhile, Gemini continues to deny the SEC’s allegations, maintaining its stance that the program was not subject to SEC registration.
SEC’s Shifting Regulatory Approach
Under the leadership of former President Donald Trump, the SEC has eased its regulatory stance on cryptocurrency markets. The SEC stopped pursuing legal action against major cryptocurrency exchanges Coinbase and Kraken as well as settled with Ripple Labs over unregistered securities sales. The cryptocurrency community views these recent shift in SEC regulations as positive due to anticipated more favorable conditions from the new Trump presidency.
The Trump administration introduced regulatory measures that aimed to loosen oversight of cryptocurrency markets instead of the Biden administration’s present-day focus on stricter controls. Gemini reached an agreement with the New York regulators to repay customers at least $1.1 billion as one of its separate legal settlements which demonstrate continuous work toward financial solutions.
