The Securities and Exchange Commission (SEC) has dismissed its lawsuit against Gemini, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss. This decision comes after a joint filing with the court requesting dismissal, resolving a case centered on the collapse of Gemini Earn, an investment product that left some investors locked out of their funds for over a year and a half.
Background of the Case
The lawsuit originally focused on accusations that Gemini misled investors through its Earn program. Investors had loaned crypto assets with the expectation of returns, but found their funds inaccessible when the program froze withdrawals. The New York Attorney General, Letitia James, filed a separate fraud lawsuit against Gemini in 2023.
Settlement and Dismissal
The SEC’s decision to drop the case now appears linked to a 2024 settlement between Gemini and the state of New York. Under the terms of that settlement, investors have reportedly received 100% of the crypto assets they had loaned through the Earn program. This outcome is cited in the joint filing as justification for dismissing the federal lawsuit.
Political Context and Wider Trends
This case is happening alongside a broader trend of reduced enforcement by the SEC against crypto firms since Donald Trump took office in 2024. The New York Times reported that the SEC has either dropped, paused, or lowered penalties in over 60% of pending crypto lawsuits. The Winklevoss twins themselves have ties to Trump, having donated to his re-election campaign and supported his family’s business ventures.
This raises questions about whether political influence or a shift in enforcement priorities is behind the SEC’s decision to drop the case. The timing coincides with increased lobbying from the crypto industry and a softening of regulatory scrutiny under the current administration.
The dismissal of the lawsuit against Gemini is part of a larger trend, suggesting a more lenient approach to crypto firms under the Trump administration. This shift in enforcement could reshape the regulatory landscape for the industry, potentially encouraging riskier behavior and reducing investor protections.
