SEC and Gemini Trust Seek 60-Day Pause in $900 Million Lawsuit

The lawsuit, originally filed in January 2023, stems from the Gemini Earn program, a crypto-lending service that allowed customers to earn interest by lending their crypto assets to Genesis Global Capital, with Gemini acting as the intermediary. At its peak, the program held around $900 million in customer assets, involving over 340,000 users.

Trouble began in November 2022, when Genesis abruptly halted withdrawals amid market instability following the collapse of FTX. Shortly thereafter, Genesis filed for bankruptcy in January 2023, leaving Earn users locked out of their funds. The SEC responded by accusing both Gemini and Genesis of offering unregistered securities through the program, claiming the firms failed to provide necessary disclosures to investors.

In its lawsuit, the SEC sought civil penalties and disgorgement of ill-gotten gains, alleging the firms sidestepped federal securities laws by failing to register the offering or operate under an applicable exemption.

In a filing submitted on April 1, 2025, to the U.S. District Court for the Southern District of New York, both Gemini and the SEC asked the court to pause all deadlines related to the litigation for a period of 60 days. The joint motion said the delay would allow both parties to “facilitate discussions that may potentially narrow or resolve issues in this litigation.”

While neither side has confirmed whether these talks will result in a formal settlement, the filing emphasizes that the stay is in the public interest and could “promote judicial efficiency” by conserving resources.

This development marks a notable shift in tone from earlier proceedings, which were characterized by sharp disagreements and public criticism of the SEC’s approach to regulating crypto products.

The joint motion comes amid a broader recalibration of the SEC’s enforcement priorities under the administration of President Donald Trump. Since his return to office in January 2025, the SEC has softened its posture toward the crypto sector. Notably, several enforcement actions initiated under the previous administration, such as suits against Coinbase, Kraken, and Ripple have been scaled back, settled, or dropped altogether.

Insiders familiar with the case suggest that the SEC may be more open to negotiated outcomes as part of a wider effort to clarify regulatory boundaries without stifling innovation in digital finance.

Gemini’s co-founders, Cameron and Tyler Winklevoss, have been outspoken advocates for clearer crypto regulation. The twins each donated the maximum allowable amount to President Trump’s 2024 campaign, hoping to influence the creation of a more business-friendly environment for blockchain technology and digital assets.

A potential settlement or resolution in the Gemini Earn case could set the tone for how future enforcement actions are handled, particularly in cases involving yield-generating crypto products that have drawn the SEC’s scrutiny for years.

Moreover, such an outcome could restore some public trust in the crypto lending space, which has suffered from a string of high-profile failures, including Celsius, BlockFi, and Voyager Digital.

It remains unclear what a resolution between the SEC and Gemini might look like. Possible outcomes include a monetary settlement without an admission of wrongdoing, changes to Gemini’s product offerings, or even the dismissal of certain charges. The court must still approve the stay request.

As the 60-day pause begins, stakeholders across the crypto industry will be watching closely. Whether this signals a new era of cooperation between regulators and crypto companies, or merely a strategic pause before further litigation, remains to be seen.

What is certain, however, is that the Gemini Earn case has become a bellwether for how the U.S. government handles the intersection of traditional securities law and decentralized finance in the post-FTX era.