The cryptocurrency market is in trouble and in upheaval. Now, the popular Gemini exchange and its founders Tyler and Cameron Winklevoss are being sued. According to investors, the company was selling interest-bearing accounts without registering them as securities.
Bloomberg reports the lawsuit, Picha et al v. Gemini Trust Company, LLC et al, it before the U.S. District Court of Southern New York in Manhattan and was filed Tuesday.
According to the filing, investors in Gemini claim the company was sling high-interest accounts through its Gemini Earn program. Investors were giving Gemini cryptocurrency in exchange for the interest payments.
The suit alleges that the company did not register these accounts as securities before selling them. Furthermore, the plaintiffs argue that accounts were misleading:
“Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest. Gemini also omitted and concealed significant information concerning the risks associated with Gemini Earn, including information concerning its so-called partner and borrower in connection with the program, Genesis Global Capital, LLC (“Genesis”), to which it gave all Gemini Earn investors’ crypto assets.
“When Genesis encountered financial distress as a result of a series of collapses in the crypto market in 2022, including FTX Trading Ltd. (“FTX”), Genesis was unable to return the crypto assets it borrowed from Gemini Earn investors”
Gemini sold the accounts with 8% interest. However, when the crypto market crashed following the collapse of FTX, the company paused withdrawals and investors were forced to liquidate. Gemini has responded to the lawsuit and say it is interested in finding a solution with investors:
“We continue to work with Genesis and DCG and are operating with the utmost urgency. All parties remain engaged and collaborative,” Gemini wrote on its Gemini Earn webpage recently.
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