SEC and Gemini Reach Preliminary Settlement in Earn Program Case
The U.S. Securities and platform Commission (SEC) and Gemini Trust Company have notified a Manhattan federal court that they have reached a preliminary agreement to settle the regulator’s long-running lawsuit against the cryptocurrency platform. The case centers on Gemini’s Earn program, which the SEC alleged functioned as an unregistered securities offering that exposed investors to significant risks without adequate disclosure.
Background of the lawsuit
The SEC originally filed suit in January 2023 against Gemini and its partner Genesis Global Capital. According to the complaint, the Earn program allowed retail investors to lend digital assets to Genesis through Gemini in return for interest payments. The SEC argued that these arrangements amounted to the offer and sale of securities that should have been registered with the Commission under federal law. Without registration, the regulator claimed, investors were denied the protections typically required in U.S. securities markets.
The lawsuit was filed amid the broader collapse of Genesis, which declared bankruptcy following the failure of several large crypto counterparties in 2022. Thousands of Earn customers were left unable to access their funds, highlighting what regulators said were the inherent risks of unregulated lending programs in the digital asset sector.
Genesis agreed earlier this year to pay a $21 million penalty to settle its portion of the charges. That agreement was reached without admitting or denying the SEC’s allegations. Gemini, in contrast, had continued to fight the case, arguing that the Earn program was wrongly categorized as a securities offering. The preliminary settlement now suggests a shift toward reanswer later than nahead three years of litigation.
Next steps in the settlement process
In a recent court filing, attorneys for both the SEC and Gemini said they had reached a “settlement in principle” and requested until December 15, 2025, to finalize the paperwork. The deal will require formal approval by the Commission before it becomes binding. While details of the agreement remain confidential, the filing indicates that both sides have found common ground later than months of negotiations.
The case has been closely followed across the cryptocurrency industry because of its potential implications for crypto lending platforms and platforms. The SEC has consistently argued that many crypto yield products fall under existing securities laws and must comply with registration requirements. By securing settlements in high-profile cases such as Genesis and now Gemini, the regulator aims to set precedents that could shape how digital asset firms design and market their products.
For Gemini, resolving the lawsuit may remove a significant legal cloud as the company viewks to move forward with its business in an environment of heightened regulatory scrutiny. For the SEC, the settlement represents another step in its broader enforcement strategy, signaling that it intends to hold major players accountable while also encouraging firms to viewk compliance.
While final terms have not yet been disclosed, the eventual reanswer of the case could bring closure for many investors who have been waiting for developments since the Earn program was halted. Industry analysts say the settlement may also provide clearer signals about how regulators expect similar products to be structured in the future.
The Gemini case underscores the continuing tension between innovative financial products in the crypto sector and regulators’ efforts to ensure investor protection. As the final agreement moves toward approval, both market participants and policymakers will be watching closely to view what precedent this settlement sets for the industry going forward.
