The US Securities and Exchange Commission and the exchange Gemini submitted a joint application to place their existing lawsuit against the Gemini Earn product on hold for 60 days.
They submitted their application to Judge Edgardo Ramos of the Southern District of New York on April 1, 2025. The pause would allow both sides to pursue an eventual settlement without litigation. The case, SEC v. Genesis Global Capital, LLC et al., involves Genesis offering its Earn product, which allows users to lend their cryptocurrency and earn interest. The SEC says the product violated securities law.
SEC and Gemini seek resolution in legal dispute
Gemini has challenged these assertions, but both parties now wish to negotiate a resolution. They are of the opinion that a stay would serve the interests of all concerned, including the public and the court, by conserving judicial resources. The application contends that no party or non-party would be harmed by an interlocutory pause. Courts enjoy wide discretion to grant stays, particularly where both parties consent that it is in their best interests.
Their complaint alleges that settling would prove more productive than continuing to seek further legal remedies. They will file a joint 60-day status report to the court, updating it on their progress, if the court approves their request. This case generated widespread attention from the world of cryptocurrencies. The SEC is cracking down on lending programs, viewing them as unregistered security offerings. Gemini launched Earn to let users earn passive income from cryptocurrency investments. Genesis Global Capital, the lending partner, faced financial problems. Users couldn’t withdraw their funds. The SEC sued, claiming the program was not a registered security and violated investor protection laws.
Gemini’s case may shape crypto lending rules
Gemini launched Earn to help users earn passive income on cryptocurrency investments. However, Genesis Global Capital, the lending company behind the program, faced financial issues. As a result, Gemini users couldn’t withdraw their funds. The SEC sued the program, claiming it wasn’t a security offering and violated investor protection laws. Both sides agree that reaching an agreement is better than a lengthy lawsuit.
A settlement can be made through changes to how crypto lending companies operate or through fines. The SEC‘s take on these programs has been the focus of recent regulatory debate, as much of the industry waits for clearer guidelines. If the court grants the request, it will give both sides time to negotiate an agreement. The crypto market and lawyers are closely watching the case as it progresses, as it will set the stage for regulating digital asset lending.
