Winklevoss Twins Strike SEC Settlement Over Gemini Earn Program

The US Securities and Exchange Commission (SEC) has reached a settlement with Gemini, the crypto exchange founded by billionaire twins Tyler and Cameron Winklevoss, bringing an end to a nearly two-year legal battle over the troubled Gemini Earn program.

SEC and Gemini Agree in Principle

In a letter filed in Manhattan federal court on Monday, lawyers for both sides confirmed they had agreed “in principle” to completely resolve the lawsuit. The agreement is pending final approval by the commission, with Judge Edgardo Ramos granting the parties until December 15 to submit final paperwork.

The SEC had sued Gemini in January 2023, alleging that the Earn program constituted an unregistered securities offering. The program allowed customers to lend crypto assets in return for interest payments. At its peak, Earn attracted about $900 million from 340,000 investors, making it one of the largest consumer-facing lending initiatives in the crypto sector.

Investors Left Without Access to Funds

The case gained urgency after Genesis Global Capital, Gemini’s lending partner for the program, froze withdrawals in November 2022 in the wake of the FTX collapse. Two months later, Genesis filed for bankruptcy, leaving Earn customers unable to access their funds.

Under the program’s model, customer assets were transferred to Genesis, which paid interest to investors, while Gemini collected fees of up to 4.29%. The SEC said this arrangement deprived investors of critical disclosures required under federal securities law, putting them at risk.

Although Genesis settled earlier this year by paying a $21 million fine without admitting wrongdoing, Gemini consistently denied the allegations. Acting SEC Chair Mark Uyeda also signaled a shift in tone earlier this year when the agency informed Gemini it would not recommend enforcement action in a separate inquiry.

Settlement Follows Gemini’s IPO Success

The timing of the settlement coincides with Gemini’s recent initial public offering (IPO). Just last week, Gemini raised $425 million by selling 15.2 million shares at $28 apiece, valuing the exchange at around $3.3 billion. Shares closed at $32.52 on Monday, up 16% from the IPO price.

The IPO demonstrated investor confidence in Gemini’s long-term strategy despite ongoing regulatory headwinds. By clearing up one of its biggest legal challenges, the company hopes to restore trust among its users and stakeholders.

Winklevoss Twins’ Vision for Gemini

Tyler and Cameron Winklevoss, both 44, have long promoted Gemini as a regulated, compliance-first platform. Unlike some rivals that pursued riskier growth strategies, the twins sought to position Gemini as a mainstream financial institution bridging the gap between traditional finance and crypto.

According to Forbes, each twin is worth an estimated $4.6 billion. Their decision to settle rather than prolong litigation reflects a pragmatic approach at a time when regulators are softening their stance on crypto under the current US administration.

Broader Implications for Crypto Regulation

The resolution of the Gemini Earn case also illustrates the SEC’s willingness to close out high-profile disputes through negotiation rather than prolonged courtroom battles. With the crypto industry facing shifting policies in Washington, such settlements could pave the way for more predictable regulatory outcomes.

Still, critics argue that the Earn saga highlights deeper risks in crypto lending. Many investors remain locked out of funds, and while Gemini avoids a massive penalty, questions linger about whether regulatory oversight will prevent similar episodes in the future.

Conclusion

The Gemini Earn settlement represents both an ending and a new beginning. For the Winklevoss twins, it clears a major cloud over their exchange just as they celebrate a successful IPO. For the SEC, it underscores a more measured approach to enforcement in the evolving crypto landscape.

Yet for thousands of customers who entrusted their savings to Gemini Earn, the memory of frozen withdrawals serves as a reminder of the volatility and risk that still define much of the digital asset sector.

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