SEC To Dismiss 3-Year Lawsuit Against Gemini – Details

bitcoinistPublished on 2026-01-25Last updated on 2026-01-25

Abstract

In a major development, the US Securities and Exchange Commission (SEC) has moved to dismiss its three-year lawsuit against Gemini Trust Company with prejudice, effectively ending the legal battle over the Gemini Earn crypto lending program. The SEC had accused Gemini and Genesis Global Capital of illegally offering unregistered securities through the program, which allowed users to earn interest on crypto loans. Following Genesis's bankruptcy and the FTX collapse, all affected investors fully recovered their assets. Gemini also settled with other regulators, paying over $50 million in fines. The SEC cited these recoveries and settlements in its decision to dismiss the case permanently. This dismissal occurs amid a broader shift in US crypto regulation, including the passage of the pro-crypto GENIUS Act and ongoing legislative efforts like the Clarity Act to define digital asset oversight.

In a major development, the US Securities and Exchange Commission has filed a joint stipulation with defendant Gemini Trust Company, LLC to terminate its long-running civil enforcement action with prejudice, effectively ending the three-year legal battle over the Gemini Earn crypto lending program.

SEC Vs Gemini

In January 2023, the SEC instituted one of the most controversial crypto-related lawsuits against Gemini Trust Company and its partner, Genesis Global Capital LLC, accusing both parties of illegally offering and selling unregistered securities through the Gemini Earn lending program, a financial product that operated between 2021 and 2022, which allowed customers to lend crypto for interest at 7.4% per annum.

Following the FTX crash in 2022, Genesis, which had a significant financial exposure to the now-defunct crypto exchange, halted withdrawals on the Gemini Earn Program, effectively locking up $940 million in investor assets. Since then, a series of events has unfolded, including Genesis entering bankruptcy proceedings, and through that process, all Earn investors ultimately recovered 100 percent of their crypto assets in kind. In addition, Gemini has settled related matters with state and federal regulators, paying over $50 million in civil fines.

In the joint stipulation filed this week, the SEC noted that its decision to seek dismissal “in the exercise of its discretion” took into account the full investor recovery and those regulatory settlements. The dismissal is with prejudice, preventing the SEC from re-filing the same claims, and represents the formal end of one of the most high-profile enforcement actions in the US crypto industry.

US Crypto Regulatory Turnaround

The dismissal of the Gemini case comes amid a broader recalibration of the US crypto regulatory approach under the Donald Trump administration. Several high-profile SEC actions against major platforms, involving Coinbase, Kraken, and Binance, have been dropped or paused, reflecting a shift from a forceful regulatory approach seen under the former chairman, Gary Gensler.

At the same time, Congress and the White House continue to pursue pro-crypto legislative and policy initiatives. In July 2025, US President Donald Trump signed the GENIUS Act into law, a landmark bill establishing a comprehensive federal framework for stablecoins, aimed at boosting consumer protection and supporting broader adoption of digital assets.

Alongside the GENIUS Act, the highly anticipated Clarity Act, passed by the US House, aims to delineate regulatory responsibilities between agencies like the SEC and the Commodity Futures Trading Commission (CFTC) based on how digital assets function. The US Senate Agriculture Committee is set to observe a markup session of the bill on January 27, indicating steady progress despite recent concerning events, including public outrage by Coinbase founder Brian Armstrong and the Banking Committee’s continued postponement of its own hearing session.

Total crypto market cap valued at $2.97 trillion on the daily chart | Source: TOTAL chart on Tradingview.com

Related Questions

QWhat was the main reason the SEC decided to dismiss its lawsuit against Gemini with prejudice?

AThe SEC's decision to seek dismissal 'in the exercise of its discretion' took into account the full recovery of investor assets and the regulatory settlements Gemini had reached with state and federal regulators.

QWhat was the Gemini Earn program and what were the SEC's allegations against it?

AThe Gemini Earn program was a crypto lending product that operated between 2021 and 2022, allowing customers to lend crypto for interest. The SEC accused Gemini and its partner Genesis of illegally offering and selling unregistered securities through this program.

QWhat significant event in 2022 led to the halting of withdrawals on the Gemini Earn program?

AFollowing the FTX crash in 2022, Genesis, which had significant financial exposure to the failed exchange, halted withdrawals on the Gemini Earn Program, locking up $940 million in investor assets.

QHow does the dismissal of the Gemini case reflect a broader change in U.S. crypto regulation?

AThe dismissal is part of a broader recalibration of the U.S. crypto regulatory approach, with several high-profile SEC actions against major platforms like Coinbase, Kraken, and Binance being dropped or paused, reflecting a shift from the previous forceful regulatory stance.

QWhat are the names and purposes of the two key pro-crypto legislative acts mentioned in the article?

AThe two key acts are the GENIUS Act, a comprehensive federal framework for stablecoins aimed at consumer protection and digital asset adoption, and the Clarity Act, which aims to delineate regulatory responsibilities between the SEC and CFTC based on how digital assets function.

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