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Crypto Market Update: SEC Drops Gemini Earn Case After Investors Recover All Funds
The U.S. Securities and Exchange Commission moved to dismiss its civil lawsuit against Gemini Trust Company over the Gemini Earn programme. The filing came after all Gemini Earn investors recovered their crypto assets in full. The decision closes a three-year enforcement case tied to the crypto lending product.
Regulators filed a joint stipulation for dismissal with prejudice in federal court in New York. The action permanently bars the SEC from bringing the same claims again. Court approval now stands as the final procedural step.
The SEC said it acted after Genesis Global Capital’s bankruptcy distributions repaid users in kind. Distributions concluded in mid-2024, according to court records. The agency cited its discretion after full customer recovery.
Recovery Through Bankruptcy and Prior Settlements
Gemini Earn users received a complete return of their crypto assets during Genesis distributions. Court filings confirm a 100 percent in-kind recovery. The SEC referenced those outcomes in its dismissal filing.
Earlier, a federal judge allowed the case to proceed past a motion to dismiss. The judge ruled the agency plausibly alleged securities law violations. Later settlements reshaped the case’s path.
Genesis Global Capital settled with the SEC and agreed to pay a $21 million fine. Gemini settled separately with New York state regulators. Those agreements supported customer recovery efforts.
Origins of the Gemini Earn Case
The SEC filed charges in January 2023 against Gemini and Genesis. The agency alleged the Earn program amounted to an unregistered securities offering. Gemini launched the product in 2021. The program allowed customers to lend crypto in exchange for yield. Withdrawals stopped in November 2022 as market stress spread. The freeze followed the collapse of FTX.
About $940 million became tied up across hundreds of thousands of accounts. Subsequent bankruptcy proceedings governed the recovery process. Those steps later returned assets to users.
Read More: SEC Ends Gemini Earn Lawsuit After 100% In-Kind Crypto Repayment
Broader Enforcement Context and Regulatory Shift
The Gemini case joins more than a dozen lawsuits the SEC dropped over the last year. Most cases began during the presidency of Joe Biden. They also fell under former SEC Chair Gary Gensler.
The SEC considered earlier settlements with Gemini and other regulators. Those factors informed the final decision. The dismissal includes no fines or penalties against Gemini.
The move reflects a broader pullback in crypto enforcement since Paul Atkins took office in 2025. The agency has shifted toward revising digital asset rules. Could full investor repayment increasingly shape future enforcement outcomes?
What Lies Ahead
The SEC closed its Gemini Earn case after all investors recovered funds through the Genesis bankruptcy process. The dismissal ends a long legal dispute with no penalties for Gemini. The outcome shows how full customer repayment can resolve regulatory actions and restore operational certainty.
