Tech. Science. Culture.
We may earn a commission from links on this page

Crypto Exchange Gemini and Winklevoss Twins Sued by Investors

The lawsuit alleges that the exchange conveniently left out information on the risks associated with Gemini's high-interest accounts.

We may earn a commission from links on this page.
Tyler (L) and Cameron (R) Winklevoss are the founders of cryptocurrency exchange Gemini. Get it? Because they’re twins?
Tyler (L) and Cameron (R) Winklevoss are the founders of cryptocurrency exchange Gemini. Get it? Because they’re twins?
Image: Joe Raedle (Getty Images)

Cryptocurrency exchange Gemini and its founders Cameron and Tyler Winklevoss are reportedly being sued by investors that are accusing the company and Mark Zuckerberg’s arch nemeses of selling interest-bearing accounts while failing to register them as securities, per Bloomberg.

The case—Picha et al v. Gemini Trust Company, LLC et al—was filed in the U.S. District Court of Southern New York in Manhattan on Tuesday. The suit alleges that Gemini sold high-interest accounts through a program called Gemini Earn, and investors lent Gemini crypto assets in exchange for interest payments. While Picha et al argue that Gemini failed to register these accounts as securities prior to selling them to investors, the plaintiffs also claim that these accounts were marketed with misleading statements. The complaint reads:

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

Advertisement

According to Bloomberg, Gemini Earn was touting a whopping 8% interest earned in these accounts, which was a lucrative promise for potential investors. In November of this year, the company paused withdrawals after fallout from the FTX collapse spooked investors of Gemini’s key partner Genesis Global, causing investors to liquidate their assets.

The complaint says that at this time, “Gemini halted the Gemini Earn program and refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program.” According to a report from Decrypt, Genesis could owe Gemini Earn investors upwards of $900 million.

Advertisement

“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 in a statement published last week. In a subsequent statement published on December 27, the company wrote, “We continued to work through the Christmas holiday toward a resolution. We expect a more fulsome update by the end of the week.