That case appears to be specific to Gemini Earn, a "staking" product where users would loan Gemini money and in exchange would get returns on that money through Gemini/Genesis's investment of those funds.

Under the Howey test (a security is "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party") this is pretty clearly an unregistered security IMO. Whereas e.g. using Gemini solely to exchange N USD for M BTC with the customer retaining ownership the whole time is probably not. So had the Winklevi stuck to being a traditional exchange, they could have avoided this specific issue.

Of course, the SEC seems to believe that many shitcoins are also securities ("Buy this token for a % share in our company! Totally not equity!" is... not a convincing argument). But that's not what the complaint you linked is actually about.