SEC to dismiss Gemini Earn lawsuit with prejudice after full investor recovery, ending three-year battle

The U.S. Securities and Exchange Commission has formally ended its civil enforcement action against Gemini Trust Company over the Gemini Earn crypto lending program, filing a joint stipulation for dismissal with prejudice in the U.S. District Court for the Southern District of New York on Friday.

The regulator cited the complete recovery of Gemini Earn investors as the primary factor in its decision. Through Genesis Global Capital's bankruptcy proceedings between May and June 2024, customers received a full return of their crypto assets in kind, according to the SEC's litigation release.

"The Commission's decision to seek dismissal of this action is 'in the exercise of its discretion,' and takes into account the '100 percent in-kind return of Gemini Earn investors' crypto assets,'" the SEC stated, also noting that state and regulatory settlements involving Gemini factored into the decision.

The dismissal with prejudice means the SEC cannot bring the same claims against Gemini again, effectively closing the book on one of the highest-profile crypto lending cases to emerge from the 2022 market collapse. Gemini did not immediately respond to a request for comment from The Block. 

A three-year legal battle

The SEC charged both Genesis and Gemini in January 2023, alleging that Gemini Earn constituted an unregistered securities offering. The program, which launched in February 2021 and offered up to 7.4% APY, froze in November 2022 when Genesis halted withdrawals amid the post-FTX credit crisis, locking roughly $940 million from 340,000 users.

A federal judge denied motions to dismiss in March 2024, finding the SEC had "plausibly alleged" securities violations. But the path to Friday's dismissal was paved by investor recovery and a series of settlements: Genesis paid $21 million to the SEC, while Gemini paid $37 million to NYDFS and contributed $40 million to the bankruptcy to facilitate full customer recovery.

The dismissal adds to a wave of SEC crypto enforcement retreats under Chairman Paul Atkins, who took over in April 2025. The agency has dropped cases against Coinbase, Kraken, Ripple, and others, though it emphasized that this decision "does not necessarily reflect the Commission's position on any other case." 

Gemini and the SEC had reached a resolution in principle which was announced in September 2025. Under Chairman Atkins, the SEC has launched "Project Crypto" to modernize its digital asset rules, part of a broader shift from the enforcement-first approach of the Gensler era. The Winklevoss twins were notable financial supporters of President Trump's 2024 campaign and have maintained close ties to the administration, attending the signing of stablecoin legislation earlier this year.

Gemini, now trading as GEMI after raising $425 million in a September 2025 IPO, is currently valued at approximately $1.14 billion. The dismissal awaits final sign-off from Judge Ramos.