Gemini Earn Saga Ends: SEC Backs Off in Major Crypto Regulatory Retreat

The SEC just folded its hand. After a protracted legal standoff, the U.S. Securities and Exchange Commission is stepping away from its enforcement action against Gemini's Earn program—a stunning reversal that sends shockwaves through crypto compliance departments.

A Regulatory Ceasefire

No settlement details, no fines announced—just a quiet withdrawal. The move effectively ends the agency's high-profile case alleging the lending product was an unregistered security. Gemini isn't declaring victory, but the silence from regulators speaks volumes.

The Ripple Effect

Watch other platforms with similar yield offerings breathe a sigh of relief. The SEC's retreat creates a precarious gray zone, potentially inviting more innovation—or more reckless behavior, depending on your perspective. It's the regulatory equivalent of a shoulder shrug.

What This Means for Your Wallet

For investors, it's a temporary reprieve from the compliance overhang that's been stifling yield products in the U.S. More options could trickle back to market. But remember: regulatory uncertainty hasn't vanished—it's just changed shape. The SEC's next move is anyone's guess.

In the end, the saga concludes not with a definitive ruling, but with a strategic retreat. It's a win for crypto's aggressive legal defense playbook and a stark reminder that in finance, sometimes the best regulation is indecision—it keeps the lawyers employed and the innovators guessing.

SEC ends Gemini Earn case but warns others

According to the release, the SEC stated that its decision was an exercise of discretion. It cited the 100 percent in-kind return of crypto assets to Gemini Earn customers. However, it also pointed to prior state and regulatory settlements tied to the program. Meanwhile, the agency suggested that this dismissal does not send any sort of shift in enforcement policy.

The filing said the decision does not reflect the SEC’s position in other cases. This involves crypto lending or yield products.

The Gemini Earn program was launched in February 2021. It granted users to earn yield by lending crypto assets to Genesis Global Capital. Gemini was acting as the front end and charged fees from users. Later,  Genesis froze withdrawals in November 2022. This move followed the collapse of FTX which triggered a massive liquidity crisis in the crypto market. 

Under Gemini Earn, customers lent bitcoin and other tokens to Genesis. In return, they received interest payments where Gemini earned fees that reached as high as 4.29%. Gemini has said customers were informed of risks. It has maintained that Genesis was responsible for the lending decisions and losses.

Genesis said it could not meet redemption requests. This resulted in more than $900 million in customer assets being locked at the time. Around 340,000 Gemini Earn users were affected due to the halt. However, Genesis filed for bankruptcy two months later.

Genesis settlement

The SEC came into action and sued Gemini and Genesis in January 2023. The agency alleged the companies sold unregistered securities to retail investors. It argued that Gemini Earn functioned as an investment contract under federal law.

Gemini denied the allegations and said that Earn was a lending arrangement and not a securities offering. However, Genesis did not contest the facts but later reached a separate settlement. Genesis reportedly agreed to pay a $21 million civil penalty. It did so without admitting or denying wrongdoing. 

The settlement between the SEC and Gemini did not resolved the claims. Both parties showed some progress in September 2025. The agency agreed in principle to settle the case. Lawyers for both sides said the agreement WOULD fully resolve the dispute, subject to commission approval.

The settlement disclosure in the case came days after Gemini completed an initial public offering. The exchange raised $425 million and the IPO valued the company at about $3.3 billion.

After months of negotiations, Gemini Earn customers eventually recovered their assets. The recovery was completed in kind rather than in cash. That outcome weighed heavily in the SEC’s decision to dismiss the case.

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