Crypto Case Closed: SEC Gives Up!

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The U.S. Securities and Exchange Commission – those guardians of financial stability, bless their bureaucratic hearts – has formally waved the white flag in its battle against Gemini Trust Company. Apparently, paperwork is so exhausting.

This brings a sort of closure, you might say, to one of those cases that seemed destined to linger on longer than a particularly stubborn hangover in the wake of the great crypto yield product implosion of 2022. One wonders if anyone involved still remembers what ‘yield’ actually meant.

In a document mysteriously referred to as a “litigation release” (sounds grand, doesn’t it?), published on 23 January, the SEC admitted – with a barely perceptible sigh – that it had filed a ‘joint stipulation to dismiss’ the case. And with prejudice, no less. Meaning they can’t try this again. One assumes they’ve run out of staplers.

The whole fuss started back in January 2023, all because of Gemini’s “Earn” program. A program, let us recall, which allowed perfectly reasonable people to lend their crypto to Genesis Global Capital in exchange for… well, promises. Promises which, as it turned out, were about as solid as a house made of slightly damp biscuits.

Full restitution cited as key factor

According to the SEC, this sudden burst of forgiveness came about “in the exercise of its discretion”. Which is a polite way of saying “they gave the money back”.

Apparently, getting 100% of the customer crypto back – in kind, naturally, because actual money is so last century – plus a few settlements at state level, was enough to make them reconsider the whole thing. It’s a bit like breaking a window and then immediately paying for a new one; technically you still broke the window, but everyone’s a bit more cheerful about it.

The regulator was keen to stress that this doesn’t mean they’re going soft on crypto. Heavens, no. It just means that this particular case is over. And it was specific to Gemini, too. Because, you know, consistency is for boring people.

Still, after nearly three years of arguing about who knew what and when, the SEC federal case against Gemini is officially… done. A minor victory for common sense, or perhaps just deeply depleted legal budgets.

It’s one of those odd occasions where things were sorted out by giving the money back, rather than establishing whether what was being sold was actually legal in the first place. Which, frankly, feels a bit like treating the symptoms and ignoring a potentially fatal disease.

A rare enforcement resolution

Dismissals with prejudice are about as common in high-profile crypto cases as a sensible investment plan. Especially the cases about yield and lending products that exploded spectacularly after Celsius, BlockFi, and Genesis had their moment.

The Gemini Earn case was one of the last outstanding issues from that rather unfortunate period. One can practically hear the regulators breathing a collective sigh of relief.

The SEC is still pursuing Genesis Global Capital, but Gemini legging it from the case suggests that, if you return the money, they might just leave you alone. It’s a novel concept, really.

What it signals for the market

This outcome doesn’t set any grand legal precedents about what crypto yield products are, nor does it imply that similar schemes are suddenly going to be allowed. Don’t start counting your unearned riches just yet.

However, it strongly suggests that returning money to disgruntled investors is a rather effective way to avoid a prolonged and embarrassing legal battle.

The SEC is still chasing down other crypto culprits, but closing the Gemini Earn case at least draws a line under one of the most convoluted and hotly debated chapters in the post-2022 crypto saga.

Final Thoughts

  • The SEC’s dismissal confirms that giving the money back is, surprisingly enough, a good way to make problems go away. Who knew?
  • While the Gemini saga is over, don’t expect the SEC to start handing out participation trophies to yield-based crypto products anytime soon.

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2026-01-24 03:09