The SEC and Gemini, the exchange founded by Tyler and Cameron Winklevoss, reached a settlement in principle to resolve the agency’s 2023 lawsuit over the Gemini Earn program, with a court deadline for an update on final papers set for Dec. 15.
Per Reuters, the filing states the agreement would completely resolve the litigation pending Commission approval, which places a clear timetable around a case that has shaped how interest-bearing crypto products are structured in the United States.
Removal of the enforcement overhang may influence Gemini’s product mix and cost of capital, as the firm calibrates offerings against an SEC posture that has emphasized advance notice on technical violations and against clearer authorization regimes taking hold in the European Union and the United Kingdom, according to SEC communications and regulatory consultations.
The Earn case began when the SEC alleged an unregistered offer and sale of securities through a retail lending product that channeled customer assets to Genesis. Per Reuters, Gemini collected up to 4.29 percent of interest as a fee from Genesis payments. The company has since worked through a sequence of state and federal actions.
According to the New York Department of Financial Services, Gemini agreed in February 2024 to return at least $1.1 billion to Earn customers and pay a $37 million penalty for safety and soundness issues. According to the New York Attorney General, Gemini separately agreed to a $50 million settlement that bars it from crypto-lending in New York, while Genesis entered a $2 billion settlement and is barred from operating in the state.
In parallel, the SEC settled with Genesis for $21 million in March 2024. Earn distributions were made in kind and totaled about $2.18 billion to roughly 232,000 users, an uncommon outcome for a retail program that was frozen in early 2023.
Author: Liam ‘Akiba’ Wright
