Investors have filed a lawsuit against Gemini Trust Co. and its founders, Tyler and Cameron Winklevoss, claiming that the cryptocurrency asset exchange sold interest-bearing accounts without properly registering them as securities.
In a proposed class-action complaint submitted on Tuesday in federal court in Manhattan, the investors charged the business and its founders with fraud and violations of the Exchange Act.
Gemini halted its redemptions in November
Investors were drawn to Gemini Trust Earn products because they offered the chance to earn up to 8% interest on their holdings. However, in the middle of November, Tyler and Cameron Winklevoss abruptly stopped accepting redemptions after a significant partner, Genesis Global, got caught up in the crypto contagion brought on by Sam Bankman-FTX Fried’s implosion.
The investors claimed in their complaint that Gemini “refused to honor any more investor redemptions, effectively wiping out all investors who still had holdings in the program.” The investors claimed that if the products had been registered, they would have received disclosures that would have improved their ability to evaluate the risks.
In response to a comment request sent via email after regular business hours, Gemini took some time to respond.
The company stated on Dec. 23 that it is working with “utmost urgency” to address Genesis’ liquidity problems and that “we will continue to work on your behalf around the clock through the holidays.”
Earlier, an identified NFT buyer reportedly filed a putative class action lawsuit against Gemini and its subsidiary Nifty Gateway on December 13 in order to seek compensation after losing millions on the NFT project, according to a Law360 report that day.
The plaintiff has filed a lawsuit against Gemini and Nifty Gateway through his law firm, Herman Jones, alleging that they sold unregistered securities to novice investors under the guise of NFTs.
Additionally, according to the plaintiff, Gemini and its Nifty Gateway failed to disclose the nature and risk of digital collectibles. Following the recent bear market, which caused many digital assets to lose more than 70% of their value, the plaintiff now has million.