SEC Capitulates: Gemini Lawsuit Dropped ‘With Prejudice’ After Full Repayment
The regulator cannot refile the charges, marking another victory for the ‘Crypto President’ era as Gemini (GEMI) trades free of the overhang.
The SEC is walking away. In a joint stipulation filed Friday in Manhattan federal court, the regulator moved to dismiss its unregistered securities lawsuit against Gemini Trust Co. with prejudice. The designation is critical: the SEC cannot refile these charges in the future.
The surrender ends a three-year legal attrition war sparked by the collapse of the Gemini Earn program. The regulator’s filing cited the "100% in-kind return" of assets to customers as the primary driver for the dismissal. "The Commission… believes the dismissal of the claims is appropriate," the filing reads. This acts as a complete regulatory clearance rather than a settlement involving penalties.
Restitution Over Retribution
The SEC’s retreat hinges on the recovery outcome. The Earn program, which froze in November 2022, locked up roughly $940 million in customer crypto. Unlike the FTX debris field, Gemini users were made whole, receiving 100% of their coins (not just dollar value) between May and June 2024 via the Genesis bankruptcy estate.
"The 100 percent in-kind return of Gemini Earn investors’ crypto assets… warrants the dismissal.", SEC Filing (Jan 23, 2026)
With no victims left to compensate, the regulator lost its leverage to pursue further punitive action.
Market Reaction: GEMI Unchained
For Gemini (NASDAQ: GEMI), the dismissal removes the final regulatory anchor dragging on its post-IPO valuation. Since its September 2025 debut, the stock has struggled to maintain momentum, currently sitting at a $1.14 billion market cap, a steep discount from its $3.3 billion IPO valuation. This legal clearance removes a major liability overhang, potentially forcing institutional allocators to re-rate the stock’s risk profile.
The ‘Crypto President’ Effect
This dismissal is not an isolated event; it is part of a pattern. It joins over a dozen enforcement actions abandoned or settled favorably since the transition to the Trump administration. The "regulation by enforcement" doctrine that characterized the previous era is being systematically dismantled, with agencies shifting focus away from firms that have successfully remediated investor harm.
