tl;dr
The U.S. Securities and Exchange Commission (SEC) reached a preliminary settlement with Gemini Trust over its crypto lending program, Gemini Earn, which the SEC claimed operated without proper registration. The agreement, pending final approval, would resolve the lawsuit with undisclosed financial t...
**SEC and Gemini Reach Preliminary Crypto Settlement: A New Chapter in Regulatory Approach**
The U.S. Securities and Exchange Commission (SEC) has struck a preliminary deal with Gemini Trust, the cryptocurrency platform co-founded by billionaire twins Tyler and Cameron Winklevoss, in a case that signals a potential shift in how regulators approach the crypto industry. The settlement resolves a lawsuit over Gemini’s now-defunct crypto lending program, Gemini Earn, which the SEC accused of operating without proper registration.
The agreement, still pending final approval from the SEC, would “completely resolve” the lawsuit but requires court and commissioner clearance. While the exact financial terms remain confidential, industry experts estimate the penalty could range between $10 million and $20 million—a far cry from the steeper fines seen under previous administrations. This leniency aligns with the SEC’s broader pivot under new leadership, including chair Paul Atkins, who has emphasized clarity over enforcement.
The case centers on Gemini Earn, a 2021 initiative that allowed users to lend crypto assets to Genesis Global Capital in exchange for interest. Gemini took fees as high as 4.29%, but the program faced turmoil in 2022. When FTX collapsed, Gemini paused withdrawals, leaving $900 million in assets tied to 340,000 users. The SEC’s lawsuit alleged that Gemini bypassed disclosure rules, a claim the platform denied.
The settlement comes just days after Gemini’s $425 million initial public offering (IPO), which valued the firm at $3.3 billion. Its stock surged 16% on Monday, closing at $32.52, suggesting investor confidence. This follows a pattern of crypto firms securing favorable terms: Ripple Labs recently settled with the SEC for a reduced penalty, and Genesis paid $21 million without admitting wrongdoing.
The SEC’s softened stance reflects a growing recognition that not all cryptocurrencies fit the traditional “security” framework. Instead, regulators are exploring tailored approaches, balancing innovation with investor protection. For average users, this means greater regulatory certainty for established players like Gemini, fostering a more stable environment for crypto adoption.
As the industry navigates this evolving landscape, the Gemini case underscores a pivotal moment: a shift from aggressive enforcement to structured oversight, potentially paving the way for crypto to coexist more seamlessly with traditional finance.