TLDR
- The SEC and Gemini have requested a 60-day stay in their lawsuit over the Gemini Earn program
- Both parties want to “explore a potential resolution” and have asked that all deadlines be suspended
- The SEC sued Gemini and Genesis in January 2023, alleging unregistered securities offerings through Gemini Earn
- Genesis settled its charges for $21 million in March 2024, but the case against Gemini remains open
- This move comes amid the SEC easing crypto oversight under the Trump administration, with several other crypto lawsuits recently dropped or settled
The U.S. Securities and Exchange Commission (SEC) and cryptocurrency exchange Gemini have jointly asked a federal court to pause their ongoing lawsuit. The request, made in an April 1 letter to New York federal court judge Edgardo Ramos, seeks a 60-day hold on the case to allow both parties to discuss a possible resolution.
The letter requested that all deadlines in the case be suspended “to allow the parties to explore a potential resolution.” Both sides stated that the pause would be in their interests and that no party would be harmed by the temporary stay.
“In this case, the parties submit that it is in each of their interests to stay this matter while they consider a potential resolution and agree that no party or non-party would be prejudiced by a stay,” the joint letter states.
Background of the Case
The SEC sued Gemini and crypto lending firm Genesis Global Capital in January 2023. The regulator alleged that both companies offered unregistered securities through the Gemini Earn program, which allowed customers to lend crypto assets including Bitcoin to Genesis in exchange for interest payments.
Gemini Earn let users earn interest on their cryptocurrency holdings, with Gemini taking a fee as high as 4.29%. However, Genesis halted withdrawals in November 2022, the same month that Sam Bankman-Fried’s FTX cryptocurrency exchange collapsed. Genesis later filed for bankruptcy in January 2023.
At the time of Genesis’s bankruptcy filing, the company held $900 million of assets from about 340,000 Gemini Earn customers. The SEC claimed that by creating the Earn program, Genesis and Gemini bypassed disclosure requirements designed to protect investors.
In March 2024, Genesis agreed to pay $21 million to settle the charges related to the lending program. This settlement is pending the resolution of claims in Genesis’s Chapter 11 bankruptcy case. Genesis did not admit to wrongdoing as part of the settlement.
The enforcement case against Gemini, however, has remained open. Gemini, which is run by billionaire twins Tyler and Cameron Winklevoss, has denied any wrongdoing in the matter.
Changing Regulatory Environment
The request for a stay comes as the SEC has eased its oversight of the cryptocurrency industry under President Donald Trump’s administration. The regulatory agency has ended several lawsuits it launched against crypto companies during the previous administration.
In February, Gemini announced that the SEC had closed a separate investigation into the firm. At that time, Gemini co-founder Cameron Winklevoss criticized the cost of the regulatory action.
“The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation. Of course, Gemini is not alone,” Winklevoss said.
In recent weeks, the SEC has ended civil lawsuits against crypto exchanges Coinbase and Kraken. The agency has also agreed to settle a case against cryptocurrency company Ripple Labs over the unregistered sale of securities.
Other crypto companies including OpenSea, Crypto.com, and Uniswap have reported that the SEC closed probes into their operations that were investigating alleged breaches of securities laws.
Next Steps in the Case
The lawyers representing both the SEC and Gemini added in their letter that a stay would be in the court’s interest as “a resolution would conserve judicial resources.” They proposed that a joint status report be submitted within 60 days after the entry of the stay.
The letter did not specify what a possible resolution would entail. It remains unclear whether this might result in a settlement, the SEC dropping its case entirely, or some other outcome.
Neither lawyers for Gemini nor the SEC immediately responded to requests for comment on the nature of the potential resolution. The Winklevoss twins, who founded Gemini, are each worth approximately $3 billion according to Forbes magazine.
The SEC has been widely expected to remain more supportive of the cryptocurrency industry under the Trump administration than it was under the Biden administration. This case represents another example of the shifting regulatory approach to digital assets under the new administration.
The SEC and Gemini’s case is filed as SEC v Gemini Trust Co et al, U.S. District Court, Southern District of New York, No. 23-00287. Judge Ramos has not yet ruled on the joint request for a stay.
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