SEC moves to dismiss lawsuit against Gemini over Earn program

The U.S. Securities and Exchange Commission (SEC) said in a Friday court filing that it has agreed to dismiss its lawsuit against crypto exchange Gemini tied to the company’s now-defunct Earn product, stating the case is no longer warranted after investors were made whole.

According to the joint stipulation filed by the SEC and Gemini, investors in the Gemini Earn program have received 100% of their crypto assets back in kind through Genesis Global Capital’s bankruptcy process. A federal judge must still formally approve the dismissal.

The SEC originally sued Gemini and Genesis in 2023, alleging the firms offered unregistered securities through Gemini’s yield-bearing Earn product. Under the program, customers lent their assets to Gemini, which in turn loaned them to Genesis. Withdrawals were halted after Genesis froze redemptions following the 2022 collapse of FTX and the broader market downturn.

The lawsuit had previously survived a motion to dismiss, with a federal judge ruling that the SEC had plausibly alleged securities law violations. However, the regulator paused the case in April last year after then-Acting Chair Mark Uyeda took over leadership of the agency.

Friday’s filing noted that Genesis has already settled with the SEC, agreeing to pay a $21 million civil penalty, while Gemini reached a separate settlement with New York state regulators.

The case is one of more than a dozen crypto-related enforcement actions the SEC has dropped over the past year, many of which were filed during the Biden administration under former SEC Chair Gary Gensler.

Current SEC Chair Paul Atkins said last November that the agency plans to issue clearer guidance to help crypto firms determine whether their products qualify as securities — a question that remains central to ongoing legislative efforts in the U.S. Senate to define the SEC’s role in overseeing crypto markets.