The U.S. Securities and Exchange Commission (SEC) on Friday agreed to dismiss its enforcement action against the cryptocurrency exchange founded by billionaire twins Tyler and Cameron Winklevoss, after investors in its lending program fully recovered their assets. The SEC and the exchange, now operating as Gemini Space Station (GEMI.US), jointly filed an agreement with the Manhattan federal court requesting the case be dropped, citing that Gemini Earn investors had received 100% in-kind restitution of their crypto assets through the Genesis Global Capital bankruptcy proceedings between May and June 2024. The financial regulator had decided to conclude the case last year.
The case originated from the "Earn" program launched by Gemini in 2021, which the SEC alleged constituted an unregistered securities offering, leading to charges being filed in early 2023. This move was widely seen as a signal of a broader regulatory crackdown on the crypto lending industry. Specifically, in 2023, the SEC charged Genesis Global Capital and Gemini Trust Company with illegally selling securities to hundreds of thousands of investors through their crypto lending program. Under the Gemini Earn program, Gemini customers lent their crypto assets to Genesis in exchange for interest.
Gemini had previously stated that the total value of assets in the Gemini Earn program was $940 million when Genesis froze customer accounts in November 2022. A pivotal turning point in the case was Gemini's financial remediation efforts within the bankruptcy proceedings and shifts in the crypto market environment. Starting in 2024, under the coordination of the New York Department of Financial Services and the bankruptcy court, Gemini achieved 100% in-kind asset return for 340,000 Earn users, facilitated by an appreciation in the value of Genesis's liquidation assets.
According to court documents filed on Friday, "Through the Genesis bankruptcy and settlement, Gemini Earn investors have now received 100% of their assets in kind... the Commission has determined that dismissal of the claims against the Defendants is appropriate." With investors made whole, the SEC's foundational enforcement premise of "protecting harmed investors" was significantly weakened from a legal standpoint. Furthermore, Gemini agreed to pay tens of millions of dollars in fines and permanently cease its lending business, leading the regulator to ultimately choose to voluntarily dismiss the suit.
Unlike other crypto firms that collapsed after the 2022 market crash, Genesis managed to return customers' crypto assets in kind rather than liquidating a limited asset pool for cash repayment. It is noteworthy that a shift in the SEC's approach to crypto enforcement has occurred during Donald Trump's presidency. Trump has pledged to be the "crypto president," advocating for more lenient rules and promising to promote the mainstream adoption of digital currencies.
As the new administration and regulatory bodies lean towards establishing a more constructive framework for crypto compliance, the previous aggressive model of "regulation by enforcement" is receding. This shift provides an opportunity for Gemini and similar fintech companies to rebuild market credibility. Gemini's successful listing on Nasdaq last year signifies an acceleration of institutional capital flowing into the crypto space, thereby restoring investor confidence in digital assets. LSEG data shows the exchange currently has a market capitalization of $1.14 billion.
Although the SEC deliberately downplayed the broader implications of this action in its statement, emphasizing it does not represent its stance in other cases, the market widely interprets it as a substantive signal of a relaxation in the previously high-pressure regulatory policy. This strategy of "tough rhetoric but pragmatic action" reflects a compromise by US regulators in 2026 between political pressures and the wave of industry compliance.
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