SEC Moves to Dismiss Gemini Earn Lawsuit After Full Investor Repayment

The U.S. Securities and Exchange Commission (SEC) has agreed to dismiss its lawsuit against crypto exchange Gemini, marking a significant development in one of the most closely watched crypto enforcement cases in recent years. The lawsuit, which centered on Gemini’s now-defunct Earn product, is being dropped after regulators concluded that further legal action is no longer warranted.

The SEC originally sued Gemini and its lending partner Genesis Global Capital in 2023, alleging that the companies sold unregistered securities through the Gemini Earn program. Under Earn, investors deposited crypto assets with Gemini, which then loaned those funds to Genesis in exchange for yield. Problems emerged after the collapse of FTX in late 2022 and the broader crypto market downturn, when Genesis froze withdrawals, leaving Earn customers unable to access their funds.

According to a joint stipulation filed in federal court on Friday, the SEC and Gemini agreed that Gemini Earn investors have now been made whole. Through the Genesis bankruptcy proceedings and related settlements, investors reportedly received a 100% in-kind return of their crypto assets. Based on this outcome, the SEC said that dismissing the claims against Gemini was appropriate as a matter of regulatory discretion. A federal judge must still approve the dismissal for it to become final.

The case had previously survived a motion to dismiss, with a judge ruling that the SEC had plausibly alleged securities law violations. However, the regulatory landscape has shifted since then. The SEC paused the lawsuit in April of last year after Acting Chair Mark Uyeda took over the agency. Genesis has already settled with the SEC, agreeing to pay a $21 million civil penalty, while Gemini resolved separate claims with New York state regulators.

This dismissal adds to a growing list of crypto-related lawsuits the SEC has dropped over the past year, many of which were initiated under former SEC Chair Gary Gensler. Current SEC Chair Paul Atkins has signaled a more structured approach to crypto regulation, stating that the agency plans to publish clearer guidelines to help crypto companies determine whether their products qualify as securities. These issues remain central to ongoing legislative debates in Congress over how digital asset markets should be regulated in the United States.