SEC Dismisses Lawsuit Against Gemini After Full Investor Repayment
The U.S. Securities and Exchange Commission (SEC) has dropped its lawsuit against Gemini. This occurred after investors in the exchange's defunct lending program were fully repaid. The SEC and Gemini filed a joint stipulation for dismissal with prejudice in federal court in Manhattan.
The dismissal resulted from the complete return of crypto assets to all Gemini Earn investors. This was achieved through the Genesis Global Capital bankruptcy process and related settlements between May and June 2024.
Full Repayment: Genesis returned 100% of customer assets in cryptocurrency, not cash value. This was a key factor in the SEC's decision.
Prior Settlements: The decision also considered settlements Gemini reached with the New York State Department of Financial Services (NYSDFS).
SEC Discretion: The SEC stated the dismissal was "in the exercise of its discretion" and emphasized that it does not reflect its position on other crypto-related enforcement actions.
The SEC filed the lawsuit in January 2023.
The SEC accused Gemini and Genesis Global Capital of offering and selling unregistered securities through the Gemini Earn program.
The program allowed Gemini users to loan their crypto assets to Genesis for interest payments. The program held approximately $940 million in customer assets when Genesis froze withdrawals in November 2022. This followed the collapse of other major crypto firms like FTX.
This dismissal is part of a broader trend of leniency in the SEC's approach to digital asset regulation. More than 60% of pending crypto cases have been dismissed, paused, or had penalties reduced. Gemini, a publicly traded company, has filed to go public and sees this as a growth opportunity as regulatory pressures ease.