Investors have filed a fraud lawsuit against cryptocurrency exchange Gemini Trust Co. and its founders, Tyler and Cameron Winklevoss.
Investors Brendan Picha and Max J. Hastings claimed the business sold interest-bearing accounts without adequately registering them as securities in a document filed on Tuesday in federal court in Manhattan.
The case centers on Gemini interest accounts that the business offered to investors through Gemini Earn, in which participants lent Gemini cryptocurrency in return for substantial interest payments.
The lawsuit claims that “Gemini repeatedly made false and misleading claims regarding GIAs, including that GIAs was a safe way to collect interest.” Following the bankruptcy filing of cryptocurrency exchange FTX on November 16, the company suspended the program and “refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program, including Plaintiffs.”
Genesis Trading, which participated in the program as Gemini’s borrower, as well as Gemini experienced a liquidity crisis as a result of the FTX meltdown.
According to the lawsuit, investors would have been better informed of the risks involved if the products had been registered as securities.
Gemini’s actions, according to the lawsuit, “have resulted in significant financial losses for its investors.” The lawsuit is asking for class-action status. The investors are suing Gemini for compensation, damages, and “other statutory and equitable relief.”
A message posted on the Gemini Earn website on Tuesday states: “We continued to work towards a resolution through the Christmas holiday. By the end of this week, a more thorough update is anticipated.
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