Lawsuit Accuses Winklevoss Twins & Gemini of Fraud and Unregistered Securities31. December 2022
• Investors have filed a lawsuit against Gemini and its founders, the Winklevoss twins, accusing them of fraud and other crimes.
• The lawsuit alleges that Gemini offered unregistered securities in the form of interest-bearing accounts.
• After the collapse of FTX, Gemini immediately halted withdrawals for the interest-bearing contract.
Investors have recently filed a lawsuit against the U.S. cryptocurrency exchange Gemini and its founders Tyler and Cameron Winklevoss, accusing them of fraud and other crimes. The lawsuit was filed in Manhattan federal court on Tuesday and claims that Gemini provided unregistered securities in the form of interest-bearing accounts.
In 2015, the Winklevoss twins launched Gemini, which included a high-yield program called Gemini Earn. This product worked like a cryptocurrency savings account, allowing clients to deposit their cryptocurrency in exchange for interest. However, according to the lawsuit filed on Tuesday, investors allege that Gemini refused to honor any further investor redemptions, thereby “wiping out” all investors who still had assets in the program.
The lawsuit comes after the collapse of FTX, a cryptocurrency exchange, last month, which caused a liquidity problem at Genesis Global Capital. As a result, Gemini immediately halted withdrawals for the interest-bearing contract and this decision negatively impacted investors who had their assets in the program. According to estimates, Genesis had $175 million invested in FTX prior to the bankruptcy filing of the exchange.
The class action lawsuit filed by Brendan Picha and Max J. Hastings on behalf of other impacted Gemini investors claims that the Winklevoss twins and their crypto exchange violated the Exchange Act and accused them of fraud. The lawsuit seeks to “enjoin the Gemini Defendants from continuing their fraudulent, deceptive and unfair practices, and to disgorge their ill-gotten gains.”
The Winklevoss twins have yet to respond to the accusations but the lawsuit is sure to be a significant blow to the reputation of the brothers and their cryptocurrency exchange. This is not the first time the Winklevoss twins have faced legal action, as they have previously been involved in disputes over the ownership of the social media platform Facebook.