SEC Seeks 60-Day Pause in Gemini, Genesis Legal Battle

The U.S. Securities and Exchange Commission (SEC) has formally requested a 60-day delay in its ongoing legal battle against Gemini Trust and Genesis Global Capital. This request, submitted to the U.S. District Court for the Southern District of New York on April 1, aims to suspend all deadlines while both parties engage in discussions. The lawsuit, initially filed by the SEC in January 2023, accuses Gemini Trust and Genesis Global Capital of illegally raising billions of dollars through their Gemini Earn program. The SEC contends that the program should have been registered as a securities offering, a requirement that the companies allegedly overlooked.

Gemini Trust had previously reached a settlement with New York state regulators, agreeing to return $2.18 billion to customers affected by the shutdown of the Gemini Earn program. This settlement was intended to compensate users who had deposited funds into the program before it was halted. The current delay request does not specify the potential outcomes of the ongoing discussions, which could range from a settlement to a case dismissal or another form of resolution. Both the SEC and Gemini Trust argue that pausing the lawsuit is in the public interest, allowing negotiations to proceed and conserving judicial resources. If approved, the SEC and Gemini will provide a joint status update within 60 days.

The crypto industry has shown a positive response to the regulatory changes, with several companies and executives expressing dissatisfaction with the previous regulatory stance under former SEC Chair. The Winklevoss twins, co-founders of Gemini, have been vocal advocates for a more favorable regulatory environment. Their support for the new administration is evident in their financial backing of the 2024 campaign, with each donating the maximum permitted amount.

Genesis Global Capital, which managed the Gemini Earn program, settled its portion of the case in February 2024 by paying a $21 million fine. Before halting withdrawals in November 2022, Genesis had approximately $900 million in assets for around 340,000 Gemini Earn clients. With the SEC’s request for a delay currently under court consideration, the future of the case remains uncertain. The timing and outcome—whether it proceeds to settlement, dismissal, or continued litigation—will depend on the negotiations over the next two months. Meanwhile, the shift in regulatory policy under the new administration suggests a more favorable environment for cryptocurrency companies in the coming years.