SEC and Gemini Trust Agree to Pause Litigation in Crypto Securities Case
Nearly three years after the U.S. Securities and Exchange Commission (SEC) initiated legal action over the Gemini Earn crypto lending product, Gemini Trust Company and the regulator have announced a tentative settlement to resolve the dispute.
On Monday, both parties jointly filed a status update with the U.S. District Court for the Southern District of New York (SDNY) stating they had reached a “resolution in principle” concerning the securities case stemming from the SEC’s January 2023 complaint. The filing requests an indefinite stay of all litigation in the civil matter, contingent on SEC approval.
If the case remains unresolved by December 15, the SEC and Gemini have agreed to submit another status report to the court.
Background of the Case
The SEC’s complaint accused Gemini Trust and Genesis Global Capital of conducting an unregistered offering and sale of securities to retail investors across the U.S. from February 2021 through November 2022. Specifically, the agencies alleged that investors transferred crypto assets through Gemini’s Earn program expecting interest payments, effectively constituting securities transactions that were not registered with regulators.
The complaint highlighted that billions of dollars in crypto assets were raised predominantly from U.S. retail investors without adequate disclosure of material information necessary for informed investment decisions. The SEC criticized Gemini and Genesis for providing selective and insufficient disclosures instead of full compliance with federal securities laws.
In a related development, the SEC, under acting Chair Mark Uyeda, had earlier informed Gemini in February that it would not pursue enforcement actions from a separate investigation into the company.
Progress Toward Resolution
The proposed agreement between Gemini and the SEC likely represents a final phase in resolving the broader case, following the SEC’s $21 million settlement with Genesis Global Capital earlier this year.
Pending regulatory review, the indefinite stay will halt ongoing litigation, allowing both parties to finalize terms and possibly avoid protracted court proceedings.
Political Context and Market Developments
Gemini’s founders, Cameron and Tyler Winklevoss, have maintained close political connections with former President Donald Trump, supporting his 2024 campaign and engaging with the White House on crypto policy matters. The twins were notably present during the signing of the GENIUS stablecoin legislation and reportedly lobbied Trump regarding the nomination of Brian Quintenz as chair of the U.S. Commodity Futures Trading Commission (CFTC).
Recent reports revealed text exchanges between Quintenz and the Winklevoss brothers discussing enforcement assurances tied to Quintenz’s potential confirmation. The White House requested a Senate committee to delay Quintenz’s hearing before the August recess, and no new hearing date has been set as of Monday.
Meanwhile, Gemini launched its initial public offering (IPO) last Friday, raising approximately $425 million through the sale of 15.2 million shares, signaling strong investor interest amid ongoing regulatory scrutiny.
FinOracleAI — Market View
This tentative settlement between the SEC and Gemini reduces near-term regulatory uncertainty surrounding Gemini and related crypto lending products. The indefinite stay on litigation suggests a de-escalation of enforcement risk, which may bolster investor confidence in Gemini’s ongoing IPO and broader crypto lending platforms.
However, final approval by the SEC remains a key risk factor, and any changes to settlement terms could reignite legal challenges. Market participants should monitor the December 15 deadline and any further regulatory guidance on crypto securities offerings.
Impact: positive
