SEC Dismisses Case Against Gemini Over Earn Program

The U.S. Securities and Exchange Commission has dismissed its civil enforcement action against Gemini Trust Company, ending a three-year legal dispute over the cryptocurrency firm's Earn lending program. The joint stipulation, filed in federal court this week, dismisses the case with prejudice, barring the agency from refiling the same claims.

The lawsuit, initiated in January 2023, accused Gemini and its partner Genesis Global Capital of offering unregistered securities through the Gemini Earn program. Launched in 2021, the program enabled customers to lend digital assets to Genesis in exchange for an annual interest rate of about 7.4 percent. Gemini acted as an intermediary, earning a portion of the fees. The arrangement unraveled in late 2022 following the collapse of the FTX exchange, which exposed Genesis to significant financial strain. Genesis halted withdrawals, freezing approximately $940 million in customer assets and leaving hundreds of thousands of investors unable to access their funds for up to 18 months.

Investor recovery became the pivotal factor in the SEC's decision to drop the case. Through Genesis's bankruptcy proceedings, all Gemini Earn participants...