SEC and Gemini Seek Pause in Lawsuit to Explore Possible Settlement

This move from the SEC and Gemini is part of the broader regulatory shift under President Trump’s administration, which has seen the SEC withdraw several crypto-related enforcement actions. Meanwhile, Kentucky dropped its staking lawsuit against Coinbase, joining Vermont and South Carolina. Despite these legal wins, Coinbase reported its worst quarter since the FTX collapse in 2022, with a nearly 30% stock price drop.

Gemini and SEC Consider Settlement

The U.S. Securities and Exchange Commission (SEC) and crypto exchange Gemini jointly requested a pause in the regulator’s lawsuit concerning Gemini’s Earn program. In a letter that was submitted on April 1 to Judge Edgardo Ramos of the New York federal court, attorneys representing both the SEC and Genesis Global Capital asked for a 60-day hold on the proceedings to allow time to explore a potential resolution. 

Letter to Judge Edgardo Ramos

They also requested that all related deadlines be suspended during this period, and suggested that a settlement will serve the interests of all parties involved and conserve judicial resources. The letter also mentioned that no party will be disadvantaged by the proposed stay and recommended submitting a joint status update in 60 days.

The lawsuit was originally filed in January of 2023, and it accused Gemini and Genesis of offering unregistered securities through the Gemini Earn program. Although Genesis reached a $21 million settlement with the SEC in March of 2024, the case against Gemini is still pending. 

The specifics of a potential resolution is still unclear. However, the SEC recently withdrew several enforcement actions against major crypto firms, including Coinbase, Ripple, and Kraken, due to the broader shift in regulatory posture under President Donald Trump’s administration.

In February, Gemini revealed that the SEC closed a separate investigation into the company. Gemini co-founder Cameron Winklevoss criticized the regulator, and stated that the lawsuits cost the firm tens of millions in legal fees and hundreds of millions in lost innovation and productivity. Other crypto companies like OpenSea, Crypto.com, and Uniswap also reported that the SEC recently ended investigations into their operations without any further action.

Kentucky Drops Coinbase Lawsuit

Kentucky’s financial regulator also recently dismissed its lawsuit against crypto exchange Coinbase over the platform’s staking rewards program, joining Vermont and South Carolina. The Kentucky Department of Financial Institutions filed a joint stipulation to dismiss the case with Coinbase on April 1.

This ended its part in the broader legal crusade that started in June of 2023 when 10 state regulators filed lawsuits against the exchange. The dismissal took place after the SEC’s recent decision to drop its federal lawsuit against Coinbase and comes amid a wider regulatory shift toward a softer stance on cryptocurrency enforcement.

Coinbase’s chief legal officer, Paul Grewal, responded to the dismissal by calling on Congress to introduce a federal market structure law to replace the current fragmented, state-by-state legal approach. Although Kentucky, Vermont, and South Carolina have now withdrawn their cases, seven states are still pursuing lawsuits accusing Coinbase of violating securities laws through its staking program. These states include Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin.

Vermont was the first state to end its action, and pointed to the SEC’s decision to drop its lawsuit and the potential for updated federal regulatory guidance as the reasons for its decision. South Carolina followed shortly after, and filed a joint stipulation with Coinbase to end its case on March 27. Kentucky’s move also happened just days after the state’s governor, Andy Beshear, signed the so-called “Bitcoin Rights” bill into law, which provides protections for crypto self-custody and exempts mining activities from certain regulatory classifications.

Overall, these Coinbase developments are part of the broader trend of regulatory rollback under the SEC’s new approach to cryptocurrency oversight, which has included dropping or delaying multiple enforcement actions initiated during the Biden administration. The SEC also formed a Crypto Task Force that is specifically aimed at working with the industry to develop clearer regulatory guidelines.

Coinbase Posts Worst Quarter Since FTX Crash

Despite Coinbase’s latest legal win, the company experienced its worst quarterly performance since the collapse of FTX in 2022, with its stock price falling by almost 30% in the first quarter of 2025. The company’s shares opened the year at just over $257 and closed the quarter at around $174. This is the steepest decline since Q4 of 2022 when Coinbase’s stock dropped by 46.4% after the FTX debacle. 

Coinbase share price year-to-date (Source: Google Finance)

FTX was once one of the world’s largest crypto exchanges, but collapsed in November of 2022 after serious financial misconduct came to light. The crisis began when a leaked balance sheet revealed that Alameda Research, FTX’s sister trading firm, held most of its assets in FTX’s own FTT tokens. This raised some serious concerns about their financial stability and triggered a massive sell-off when Binance announced it would dump its FTT holdings.

As a result of this, FTX faced a liquidity crisis and couldn’t process the withdrawals. It was later revealed that FTX secretly used billions of dollars in customer funds to cover losses at Alameda. Within days, FTX filed for bankruptcy and CEO Sam Bankman-Fried resigned. The collapse wiped out billions in value and shook confidence in the crypto industry.

Despite its growing dominance in the crypto sector and its increasing influence on the Ethereum network, Coinbase has not been immune to the broader market downturn. The company is expected to release its Q1 financials in early May, with early data indicating around $750 million in transaction revenue and projected subscription revenue between $685 million and $765 million. Market analysts estimate Coinbase’s Q1 profits to be approximately $1.87 billion.

(Source: Stock Titan)

The decline in Coinbase’s stock reflects the downturn across the crypto industry during the first quarter. In fact, major mining firms also suffered sharp losses. Marathon Digital Holdings’ shares fell over 37%, Riot Platforms dropped by more than 32%, and Bitfarms lost nearly half its value. Hut 8’s stock declined by almost 35%, while Hive Digital Technologies and mining hardware producer Canaan Creative saw their shares lose more than 50% and 58.4%, respectively. Even a high-profile partnership between Hut 8 and President Donald Trump’s sons to create the world’s largest Bitcoin mining operation failed to lift the firm’s stock price.

The slump in crypto-related stocks also took place alongside a broader decline in the US stock market, with the S&P 500 index falling by over 4.75% in the same period. Analysts attribute most of the market uncertainty to geopolitical tensions, particularly the ongoing trade war under President Trump’s administration. 

Strategy year-to-date stock performance (Source: Google Finance)

Expectations of more tariffs fueled investor anxiety, and severely impacted both traditional and crypto markets. However, some companies weathered the storm better than others. Strategy, which was formerly called MicroStrategy, saw a modest stock price increase of just under 6%, supported by its heavy Bitcoin holdings and impressive growth in 2024.