Gemini Clears SEC Hurdle as Agency Closes Two-Year Investigation

The U.S. Securities and Exchange Commission (SEC) has closed its nearly two-year investigation into Gemini, a cryptocurrency exchange led by Cameron and Tyler Winklevoss. The agency informed Gemini’s litigation counsel on Monday that it would not be pursuing enforcement action against the firm.

Background of the Investigation

Gemini was initially charged alongside Genesis Global Capital in January 2023 over its now-defunct Earn program, which the SEC claimed involved the sale of unregistered securities. The program allowed users to lend crypto assets in exchange for yield but collapsed after Genesis halted withdrawals during the 2022 bear market.

Although the case is now closed, the SEC emphasized that this decision is not an official exoneration and left the door open for future action.

Winklevoss’ Reaction and Call for Reform

Cameron Winklevoss welcomed the news, calling it a milestone in ending the “war on crypto.” However, he argued that the outcome does little to undo the “tens of millions of dollars in legal bills” and the broader setbacks inflicted on the industry.

“The SEC’s behavior in aggregate towards other crypto companies and projects cost orders of magnitude more and caused unquantifiable loss in economic growth for America.”

Winklevoss also proposed several measures to prevent similar crackdowns in the future, including:

  • Reimbursement measures: Companies caught in regulatory battles should be compensated three times their legal costs if an agency fails to establish clear rules before launching an investigation.
  • “Dishonorable discharge” policy: SEC officials involved in baseless enforcement actions should be publicly fired, with their names and roles listed on the agency’s website.
  • Agency ban: Regulators who have “weaponized the law” should be permanently barred from holding government positions.

SEC’s Aggressive Stance Under Former Chair Gary Gensler

Under former SEC Chair Gary Gensler, the agency took an aggressive stance against the crypto industry, bringing over 100 enforcement actions against companies since 2021. His tenure saw lawsuits against major firms, including Coinbase, Binance, Ripple, and Kraken, over allegations of operating as unregistered securities platforms.

Gensler’s approach, often criticized as “regulation by enforcement,” led to legal battles that shaped the industry’s relationship with regulators.

SEC’s Shift in Crypto Litigation

Since Gensler’s departure in January, the SEC has begun dialing back its crypto litigation. Throughout February, the agency closed its investigations into Coinbase, OpenSea, Uniswap Labs, and Robinhood Crypto.

For more news on the cryptocurrency industry and regulatory developments, visit Global Crypto News.

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