In brief
- The pair have asked Judge Edgardo Ramos to stay litigation until later this year while settlement paperwork is finalized.
- The case centers on whether Gemini Earn, a yield-bearing service tied to Genesis, constituted an unregistered securities offering.
- A final resolution could set precedent for how regulators treat crypto lending and yield products in the U.S.
Gemini and the U.S. Securities and Exchange Commission told a Manhattan federal court on Monday that they have reached a “resolution in principle” to end a high-profile enforcement action over the crypto exchange’s lending program.
The status report was filed as a letter to the Southern District of New York and asked Judge Edgardo Ramos to stay all deadlines until December 15 while the parties finalize the paperwork needed to complete the settlement.
The case has become a bellwether for how regulators handle yield-generating crypto products, which the SEC previously argued resembled securities contracts despite industry firms contending they are closer to traditional lending.
A final resolution could set a template for how future products are structured, including whether disclosures and registration are required or whether some models remain off-limits.
Gemini’s troubles with the SEC began in January 2023, when the latter accused the crypto firm and its former partner Genesis Global Capital of offering unregistered securities through Earn, a yield-bearing service that promised returns on customer deposits.
More than $900 million of customer funds were locked up when Genesis collapsed later that year, sparking litigation that has stretched across multiple bankruptcy and enforcement tracks.
While the letter on Monday did not disclose specific settlement terms, both sides emphasized that discussions had matured enough to suspend active litigation.
Such “in-principle” agreements move through a formal process in which SEC staff and respondents must submit a signed settlement offer within 15 business days, followed by staff forwarding the offer and recommendation to the Commission within 20 business days.
The agreement only becomes effective if the Commission votes to accept it; otherwise, the stay lapses and litigation resumes, according to the SEC’s rules of practice. Decrypt has reached out to the SEC and Gemini for comment.
The latest filing follows a series of incremental moves toward resolution.
In February and July, the agency began softening its posture in some crypto cases, with Gemini separately cleared of a probe into potential market manipulation.
By April, Gemini and the SEC sought a 60-day pause in proceedings as talks advanced.
For customers still waiting on repayment through Genesis's bankruptcy estate, the timeline remains uncertain.
The shift toward settlement suggests that regulatory pressure on Gemini itself could be easing, potentially allowing the firm to refocus on its core exchange business as competitors push ahead in a maturing U.S. crypto market.