The U.S. Securities and Exchange Commission (SEC) has reached a preliminary settlement with crypto exchange Gemini Trust regarding its Gemini Earn program. This settlement could bring an end to a lawsuit that has been ongoing since early 2023.
Background of the case
The SEC accused Gemini of failing to properly register its Gemini Earn lending program before offering it to everyday investors. Launched in 2021, the program allowed customers to lend bitcoin and other cryptocurrencies to Genesis Global Capital in return for interest. Trouble began when Genesis suspended withdrawals in November 2022, leaving around 340,000 Gemini Earn customers without access to approximately $900 million in assets.
Settlement details
In a letter filed on Monday in the Manhattan federal court, lawyers from both sides confirmed the settlement would "completely resolve" the lawsuit. They requested U.S. District Judge Edgardo Ramos to halt all deadlines and grant them time until December 15 to finalize the paperwork. The precise terms remain confidential, pending approval from SEC commissioners.
Future of Gemini Trust
If approved, the agreement would remove a significant legal hurdle for Gemini as it looks to expand its business following its public listing. For investors, the case serves as a reminder that crypto lending platforms come with regulatory risks and the importance of clear disclosure rules to protect customers.
The preliminary settlement between SEC and Gemini Trust may mark an important milestone for the company, as well as underscore the significance of adhering to regulatory requirements in the crypto industry.
