- Gemini and the U.S. Securities and Exchange Commission (SEC) have reached a provisional agreement to resolve their case regarding the Earn program.
- Both parties have asked a Manhattan federal judge to pause legal proceedings until December 15 while they finalize settlement documents.
- The case addresses whether Gemini Earn, a high-yield crypto lending product, functioned as an unregistered securities offering.
- The outcome may set a precedent for how U.S. regulators treat crypto lending and similar yield products in the future.
- More than $900 million in customer funds were impacted when Genesis Global Capital, Gemini’s partner in Earn, collapsed in 2023.
Gemini and the U.S. Securities and Exchange Commission have jointly asked a federal court in Manhattan to pause litigation until mid-December after the parties agreed in principle to settle a high-profile dispute involving the crypto exchange’s Earn lending program.
The request, filed as a letter to Judge Edgardo Ramos of the Southern District of New York, asks for a stay of all deadlines while the settlement paperwork is completed. The agreement comes as both groups worked toward resolving whether Gemini Earn—a service that allowed users to receive yields by lending out their cryptocurrency through a partnership with Genesis Global Capital—was an unregistered securities offering.
The SEC has argued that yield-generating crypto products like Earn are essentially investment contracts and should be registered as securities. Crypto firms have disputed this, claiming their services are more akin to traditional lending. The court filing did not reveal settlement details, but both sides agreed discussions had progressed enough to halt litigation for now.
According to the SEC’s rules of practice, “in-principle” settlement agreements move through a formal process. After a signed offer is submitted within 15 business days, the staff forwards the recommendation to the Commission within 20 business days. The agreement becomes effective only if the Commission votes to accept it; otherwise, litigation will resume. Further details can be found at the SEC’s rules of practice.
The case originated in January 2023, when the SEC accused Gemini and Genesis Global Capital of offering unregistered securities through the Earn program, leading to more than $900 million in customer funds being locked up following Genesis’s collapse later that year. Since then, the situation has involved separate bankruptcy proceedings and regulatory actions.
Earlier this year, the SEC eased its stance in some crypto cases, and Gemini was cleared of a market manipulation probe. In April, both parties sought a 60-day pause as settlement talks moved forward.
Customers with funds tied up in the Genesis bankruptcy are still unsure when repayments will occur. The possible settlement suggests reduced regulatory pressure on Gemini, which may allow it to focus more on its core exchange operations as the U.S. crypto sector continues to develop.
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