Crypto Lawsuit Freeze: Gemini and SEC Move Toward Secret Resolution

Gemini and the SEC have asked a federal court to pause their legal case for 60 days.
Both parties want time to explore a potential resolution regarding the Gemini Earn crypto lending program.
The SEC filed the lawsuit in January 2023, claiming Gemini offered unregistered securities.

The Securities and Exchange Commission and cryptocurrency exchange Gemini agreed to suspend their ongoing legal dispute jointly. On April 1, a New York federal court received the joint request from both parties for a 60-day stay. The parties are working to find possible solutions to the Gemini Earn crypto lending program.

The joint document submitted to Judge Edgardo Ramos details how all deadlines should stop under their suspension request. Every side of the dispute maintained that a planned stay would have no detrimental impact on all those involved in the proceedings. According to their joint plan, customers would receive an updated report from the court within sixty days of receiving its approval.

The courts request for a hold came after Gemini had faced legal action from the SEC for more than twelve months. SEC initiated the lawsuit against Gemini in January 2023. The Earn program forms the core of Geminis legal dispute because the SEC asserts that Earn distributed unlicensed investment products.

Gemini Faces Heat Over Earn Program

Gemini Earn served as a platform that enabled customers to deposit their crypto assets to Genesis Global Capital in order to receive interest payments. Clients participated in these transactions through Gemini, as Gemini charged fees believed to reach 4.29%. Genesis Global Capital implemented a withdrawal freeze in November 2022, which resulted in substantial losses to its user base.

The freezing of Genesiss operations occurred at the same time that major cryptocurrency exchange FTX collapsed, resulting in reduced crypto market liquidity. The assets Genesis maintained from Gemini Earn customers reached approximately $900 million when the freeze occurred. Because of this new development, the SEC initiated legal proceedings against both companies.

The legal difficulty regarding Genesis.com intensified after the company filed for bankruptcy in January 2023. SEC officials charged Gemini and Genesis for violating registration terms established within federal securities legislation. Gemini refutes these claims by defending the Earn program as adhering to legal structures.

SEC Eyes Settlement in Gemini Dispute

As part of its settlement with the SEC, Genesis agreed to pay $21 million to resolve financial misconduct related to its lending program during March 2024. The resolution depends first on resolving all pending claims against Genesis in the bankruptcy court. The settlement between the SEC and Genesis did not include any acceptance of legal violations.

Since the Genesis resolution, the SEC has continued its legal actions against Gemini. The Winklevoss-owned exchange has been continuously dedicated to following legal standards since the beginning of this process. This joint request for a stay represents the parties first sign indicating possible de-escalation.

The proposed court directive expresses a constructive negotiation outlook rather than delaying judicial processes. The solution of this case is to preserve court resources according to both parties. The SEC has the option to terminate the business dispute or to agree on a settlement with Gemini.

Crypto Crackdown Eases as Cases Close

The request happens when the SEC moves towards different regulatory approaches under the administrations leadership. The agency initiated its relaxed regulatory approach toward cryptocurrency in January 2025. Many previous enforcement cases the prior administration launched have now been settled or closed.

The February report from Gemini confirmed that the SEC closed its independent probe targeting their business operations. Cameron Winklevoss notified that financial and operational problems persisted within the company because of the ongoing legal disputes. The regulatory actions determined that his company suffered technical setbacks and substantial financial damage through their earlier enforcement activities.

Coinbase, Kraken, Ripple, and Uniswap have experienced recent months without ongoing investigations from the SEC. The SEC has negotiated with certain companies by settling disputes even though these firms did not need to admit wrongdoing. Aggressive cryptocurrency enforcement practices decline based on recent official actions.

The case dispute between Gemini and the SEC continues at the U.S. District Court Southern District of New York under docket 23-00287. The court remains silent regarding the joint request for a judicial hold. Court approval will trigger the first required status report to appear within 60 days.

Text source: TronWeekly

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