Winkelvoss twins and their cryptocurrency exchange firm are being sued by its customers
Topics: Cryptocurrency, Money, Crime
Emily Brown
Featured Image Credit: WENN Rights Ltd / UPI / Alamy Stock Photo
Topics: Cryptocurrency, Money, Crime
Tyler and Cameron Winklevoss are being sued along with their cryptocurrency exchange firm Gemini for alleged fraud.
The twins, who in 2004 sued Facebook founder Mark Zuckerberg for allegedly copying their social network idea, are now being sued by Gemini investors in a class-action lawsuit filed in federal court in Manhattan.
Plaintiffs Brendan Picha and Max J Hastings have claimed Gemini Trust Co. offered investors interest of up to 7.4 percent in exchange for lending them crypto assets.
However, the lawsuit alleges Gemini failed to register those assets as securities in accordance with US securities laws, consequently violating the Exchange Act.
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On 16 November, Gemini halted the Gemini Earn programme after a key partner, Genesis Global, struggled with liquidity issues as a result of the collapse of Sam Bankman-Fried’s cryptocurrency exchange FTX.
Genesis acted as Gemini’s borrower for its $900m programme, and after it was halted Picha and Hastings claimed Gemini 'refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program'.
"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," the lawsuit stated.
The plaintiffs have argued they would have been able to better assess the risks of investing if the products had been registered as securities, as they would have received disclosures on the matter.
“Gemini’s actions have led to significant financial losses for its investors,” the lawsuit continues.
Gemini has issued a statement on its website in effort to 'bring as much transparency as possible to the process of finding a resolution for all Earn users to redeem their assets'.
It explains: "Gemini — acting as agent on behalf of Earn users — has been in ongoing conversations with Genesis Global Capital, LLC (Genesis), Digital Currency Group, Inc. (DCG), the parent company of Genesis, and Barry Silbert (CEO of DCG) in an effort to find a resolution as soon as possible.
"Gemini has also formed an ad hoc committee with other creditors (Creditor Committee) to coordinate efforts and advocate together. Returning your assets is our highest priority and we are operating with the utmost urgency."
FTX founder Bankman-Fried is currently under house arrest after being accused of running a years-long fraud using customer deposits at his cryptocurrency firm to cover losses at his Alameda Research hedge fund, as well as to buy real estate and make political donations.
UNILAD has reached out to Gemini for comment.