Key Highlights
- The Securities and Exchange Commission officially dismisses its lawsuit against Gemini after investors recover 100% of crypto from Gemini Earn.
- Gemini contributed roughly $50 million in cryptocurrency alongside state and Genesis settlements to ensure full repayment.
- Dismissal allows Gemini to focus on institutional services, prediction markets, and Nasdaq growth.
In a rare win for retail investors, the U.S. Securities and Exchange Commission (SEC) has dropped its long-running case against Gemini Trust Company, the crypto exchange founded by Tyler and Cameron Winklevoss.
This comes after users in the Gemini Earn program received 100% of their cryptocurrency, a recovery almost unheard of in the crypto world.
How it all began
The trouble started back in January 2023, when the SEC, the agency that enforces U.S. securities laws, filed a lawsuit against Gemini and its former partner, Genesis Global Capital. The regulator said the Gemini Earn program, which let everyday investors lend their crypto for interest, was essentially selling unregistered securities.
At its peak, the program held nearly $940 million in crypto from about 340,000 investors. Everything seemed fine until November 2022, when Genesis froze withdrawals during a liquidity crunch. Suddenly, people who thought their crypto was safe couldn’t access it. Many users were locked out of their accounts for months as the fallout from FTX and Terra/Luna rippled through the market.
“After the 100% in-kind return of Gemini Earn investors’ crypto assets through the Genesis Bankruptcy and the settlements … the Commission believes the dismissal of the claims against Defendant is appropriate,” the SEC stated in court filings.
Gemini Earn’s rise and collapse
Gemini Earn launched in December 2020. It offered users the chance to earn interest on their crypto while keeping their funds accessible at any time. Investors were drawn by the promise of higher yields than traditional banks, and for a while, the program ran smoothly.
Trouble began when Genesis’s institutional borrowers defaulted on loans. Withdrawals were frozen, and nearly $1 billion in investor crypto was inaccessible. Unlike most bankruptcies, where investors are repaid in cash at the asset’s market value, Gemini Earn users eventually received the exact tokens they had deposited, allowing them to benefit from crypto price recoveries in 2024 and 2025.
Tyler Winklevoss had once called the SEC lawsuit a “manufactured parking ticket,” a comment that now appears to have been accurate.
Settlements and repayments
Even before the federal case ended, Gemini had taken steps to protect its users. The exchange paid $37 million to the New York Department of Financial Services, and Genesis created a $2 billion fund for affected investors. Gemini added about $50 million in crypto to make sure every investor got back all of their funds.
Because of this, the SEC decided to drop the case. With everyone fully repaid, the regulators felt there was no reason to keep the lawsuit going.
A changing regulatory landscape
The SEC’s move comes amid a broader shift in U.S. crypto regulation under President Donald Trump, who returned to office in January 2025. Since then, the agency has eased enforcement in a number of high-profile cases, with Gemini now the eighth major crypto company to have a federal lawsuit dismissed.
Although the SEC denies political influence, the move aligns with the administration’s Project Crypto, aimed at encouraging cryptocurrency growth and positioning the U.S. as a global leader in digital assets.
With 100% of those assets returned, the SEC seems satisfied that the lesson has been learned without further litigation, said a market analyst following the case.
What lies ahead of Gemini
Now that the lawsuit is behind them, Gemini is moving on to new things. They are focusing on services for big institutional investors, exploring prediction markets, and growing their business on Nasdaq. Since going public on Nasdaq in late 2025, the exchange is valued at about $1.14 billion, which shows that investors are starting to trust it again.
For the crypto world, the Gemini Earn story is unusual. It’s one of the few times investors got back all of their money after a major program failed. The episode shows the risks of crypto lending programs but also that full recovery is possible when companies and regulators work together.
