What happened
- The U.S. Securities and Exchange Commission (SEC) has reached a settlement in principle with Gemini Trust (run by Tyler and Cameron Winklevoss) over its Earn crypto-lending program.
- The lawsuit accused Gemini of offering unregistered securities to retail investors through Earn.
- The settlement still needs to be approved by the SEC. All legal filings are expected to be finalized by December 15, 2025.
Key details
- What was Earn:
Gemini Earn allowed users to lend out their cryptocurrency assets (e.g. bitcoin, other tokens) via Genesis Global Capital, in exchange for interest. Gemini charged fees (up to ~4.29%) for facilitating the service. - Genesis’ role & collapse:
Genesis held about $900 million in customer assets under Earn. In November 2022, Genesis halted withdrawals (amid broader crypto-market stress) and later filed for bankruptcy, leaving many users locked out. - Past settlements & claims:
Genesis already settled with the SEC earlier (paid $21 million) without admitting wrongdoing. Gemini has denied any wrongdoing but now moves to settle the case. - Timing & context:
The settlement comes shortly after Gemini’s IPO, through which the company raised $425 million, valuing it at approximately $3.3 billion.
Implications
- For Gemini & similar platforms: This case reinforces that crypto lending products may be considered securities if they promise interest/yield to retail users, especially without proper registration and disclosures.
- Regulatory precedent: The settlement could signal a softer, more negotiable regulatory approach under the current SEC leadership—still enforcing, but potentially more open to resolution.
- Investor risk: Users who participate in such programs should be alert to risks around liquidity, counterparties’ solvency, and regulatory status. The Earn collapse with withdrawals halted shows how quickly things can deteriorate.
