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SEC Moves To Dismiss Lawsuit Against Winklevoss-Backed Gemini Exchange
Gemini drew SEC scrutiny in 2023 for offering unregistered securities to retain investors.
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The Securities and Exchange Commission (SEC) and crypto exchange Gemini are seeking court approval to dismiss the Commission's ongoing civil enforcement action against the crypto exchange.
Gemini Exchange was founded in 2014 by Cameron and Tyler Winklevoss, twin Trump campaign mega donors.
What's the Scoop?
- Dismissal Request: The SEC and Gemini are seeking court approval to dismiss a lawsuit against Gemini regarding the company's now-defunct Earn product. Their filing seeks dismissal with prejudice, preventing future charges against Gemini for the same alleged violation.
- Earn Insolvency: In February 2021, Gemini launched a program that allowed customers (including retail investors in the United States) to earn yield on their crypto assets by lending it to crypto lender Genesis. Shortly after the collapse of crypto exchange FTX in November 2022, Genesis froze over $900M in assets belonging to 340k Gemini Earn investors, claiming it lacked sufficient liquidity to meet withdrawal requests (i.e.; the program was insolvent).
- Not Relevant: According to the joint filing, the SEC's lawsuit is no longer relevant, primarily because Gemini returned 100% of customer funds in February 2024. Additionally, it notes that Gemini previously settled with the State of New York and New York Department of Financial Services in 2024 for the similar complaints, agreeing to pay $50M in restitution to victims as part of the settlement.
- SEC Lawsuit: The SEC sued both Gemini and Genesis in January 2023, alleging the companies had violated federal securities laws by selling billions of dollars worth of unregistered investment contracts to retail investors through Gemini's yield-bearing Earn products.
