What happened?
The US Securities and Exchange Commission (SEC) has reached a settlement with crypto exchange Gemini, founded by the Winklevoss twins, over its contentious Gemini Earn lending program. The lawsuit accused Gemini and Genesis Global Capital of offering unregistered securities through the Earn program, which allowed customers to lend their crypto assets in exchange for interest. The final paperwork for the settlement is expected to be submitted by Dec. 15.
Who does this affect?
The Gemini Earn program attracted around $900 million from approximately 340,000 customers. With the SEC alleging that the program’s operation amounted to an unregistered securities offering, the customers were the ones heavily impacted. They were ultimately left unable to access their funds after Genesis froze withdrawals following a sector collapse and filed for bankruptcy not long after.
Why does this matter?
This case illustrates the risks involved in the field of crypto lending and underlines how regulatory bodies like the SEC are actively working to protect investors. It also suggests a shift in US policy towards the crypto sector since President Trump took office. For the industry, it shows that despite significant penalties, regulators are open to negotiating outcomes, which may impact the way legal uncertainties surrounding other crypto products are handled in the future.