Gemini Investors File Lawsuit Against Winklevoss Twins

Key Points:

• Investors in Gemini have filed a lawsuit against Tyler and Cameron Winklevoss, the co-founders of the cryptocurrency exchange, claiming that the exchange sold them interest-bearing accounts that were not registered as securities.
• The product involved in the incident is Gemini Earn Trust, which gives investors up to 8% interest on their holdings.
• However, last month, following the FTX issue and a severe liquidity situation faced by its principal partner Genesis Global, Gemini was forced to halt withdrawals from its Earn product quickly.

Investors in Gemini have filed a lawsuit against Tyler and Cameron Winklevoss, the co-founders of the cryptocurrency exchange, claiming that the exchange sold them interest-bearing accounts that were not registered as securities.

Gemini Earn Trust, a program that offers investors up to 8% interest on their holdings, is the subject of the event. However, last month, following the FTX issue and a severe liquidity situation faced by its principal partner Genesis Global, Gemini was forced to halt withdrawals from its Earn product quickly.

According to a Bloomberg story, disgruntled investors have launched a lawsuit against two founders, accusing the company of fraud and breaking securities regulations.

Gemini “refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program,” the investors said in the filing. The investors claimed that if the goods had been registered, they would have received disclosures that would have improved their ability to evaluate the risks.

Midway through November, or shortly after the initial rumors of FTX’s liquidity problems, the exchange began to have significant problems with Gemini Earn.

Gemini Earn hasn’t been accessible to users since it stopped allowing withdrawals in November because the platform has millions of dollars stranded on Genesis. According to certain estimates, the exchange customers may be owed up to $900 million by cryptocurrency lender Genesis and its parent business, Digital Currency Group (DCG).

Cameron Winklevoss said on Twitter on December 20 that Gemini has developed a strategy for the creditor committee to address the liquidity problems at Genesis and DCG and retrieve the assets.

Numerous account holders have filed arbitration claims against the exchange and Genesis as a result of the customer agreement’s specific reference to arbitration as the only method for resolving problems. Customers claim that Earn products deceived them into thinking they were quite safe.

The claimants contend that although the agreement contains language noting that the goods pose risks, including complete loss of assets, it was underemphasized in the exchange marketing.

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