Cryptocurrency exchange Gemini, along with founders Tyler and Cameron Winklevoss, are being sued by investors over the sale of its interest-bearing products.
The company and the Winklevoss twins are accused of fraud and violation of the Exchange Act, according to a complaint filed in the US Southern District of New York on Tuesday.
Gemini Earn Program, which offered customers up to 7.4% interest, abruptly halted its offering last month, “effectively wiping out” customers who still had holdings in the program. This was a result of FTX contagion which impacted Genesis Global, an institutional crypto lender and key partner of Gemini’s.
Investors Brendan Picha and Max J. Hastings, who are listed as two of the plaintiffs in the filing, say Gemini failed to register those assets as securities in accordance with US securities law.
Gemini “refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program,” the complaint reads. “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.”
Gemini did not immediately respond to Insider’s request for comment.
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