Gemini Trust Co. Its founders, Tyler and Cameron Winklevoss, are facing a class action lawsuit over claims that cryptocurrency exchanges sold interest-bearing accounts without registering them as securities. bloomberg.
In a class action lawsuit filed in the US District Court for the Southern District of New York on Tuesday, the investors accused the company and its founders of fraud and violations of the Exchange Act.
Founded by Cameron and Tyler Winklevoss in 2015, Gemini had its own high-yield product called Gemini Earn that allowed customers to deposit their cryptocurrency for interest, similar to a bank account, with a return of between 0.45% and 8% on their holdings, subject to availability.
Gemini abruptly suspended withdrawals to Earn last month after Genesis Global — the exchange’s major partner — faced a liquidity crisis amid infections caused by the collapse of FTX, Alameda Research and dozens of other crypto entities.
According to reports earlier this month, Genesis and its parent company, Digital Currency Group (DCG), owe Gemini $900 million in debt.
In their complaint, the investors said Gemini “refused to honor any additional investor redemptions, effectively eliminating any investors who still had property in the program.”
The appellants also claim that if the Gemini Earn product had been registered, the investors would have received information that would have enabled them to better assess the risks involved.
The twins did not immediately reply DecodeComment request.
Gemini to address investor concerns
To address Genesis and DCG’s liquidity problems and provide a path to asset recovery, the New York-based company earlier this month turned to financial services firm Houlihan Lockey, which is serving as financial advisor to its creditors’ committee.
In a post on its website last week, the exchange said it continues to work with Genesis and DCG and is operating “at full speed” with all parties remaining “committed and cooperative.”
This plan is based on information provided by Genesis, DCG, and relevant advisors to date. The creditors’ committee expects the first response this week.