Who will be the next crypto top honchos to fall? Will it be the Winklevoss twins?
Investors have filed a lawsuit against embattled Gemini and its founders Tyler and Cameron Winklevoss, accusing them of fraud and other crimes, reports disclosed Tuesday.
A group of investors filed a class-action lawsuit in Manhattan federal court on Tuesday, claiming that the U.S. cryptocurrency exchange offered unregistered securities in the form of interest-bearing accounts.
According to reports, investors alleged in the lawsuit that Gemini and the Winklevoss twins violated the Exchange Act and accused the twins and their crypto exchange of fraud.
Winklevoss Twins In Hot Water
In 2015, the 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.
The lawsuit filed on Tuesday claims that Gemini refused to honor any further investor redemptions, thereby “wiping out” all investors who still had assets in the program.
After the collapse of FTX, Alameda Research, and dozens of other crypto companies last month caused a liquidity problem at Genesis Global Capital, Gemini immediately halted withdrawals for the interest-bearing contract.
According to estimates, Genesis had $175 million invested in FTX prior to the bankruptcy filing of the exchange.
Gemini And Twins Defrauding People?
Brendan Picha and Max J. Hastings, who are pursuing a class action lawsuit on behalf of other impacted Gemini clients, accuse the twins of selling Earn “with repeated false and misleading claims, including that the [accounts] were a secure manner of earning interest.”
The pair of disgruntled investors accuse the Winklevoss twins, who are collectively worth $6 billion, of selling assets to Genesis Global fraudulently.
The court filing said:
“When Genesis encountered financial difficulties in 2022 due to a succession of crypto market failures, it was unable to refund the crypto assets it had borrowed from Gemini Earn investors.”
The document further stated:
“Gemini refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program, including plaintiffs.”
Reports surfaced shortly after the withdrawal restriction claiming Genesis and its troubled parent company, Digital Currency Group (DCG), owe approximately $900 million to Gemini Earn customers.
The complaint filed on Tuesday is the first indication of legal danger for the Winklevoss twins since the demise of FTX.
It follows the prosecution of FTX founder and former CEO Sam Bankman-Fried, who is currently awaiting trial on eight counts of fraud and money laundering while under house arrest at his parents’ home in California.
The Winklevoss twins, who are also known as the Winklevii, are well-known for their high-profile lawsuit against Mark Zuckerberg in 2004.
The three guys met while attending Harvard University and later went to court about who was responsible for the idea behind the social media platform, which led to the creation of the movie The Social Network in 2010.
Meanwhile, the crypto community awaits more developments as Gemini scrambles to recover $900 million in customer funds.
Is there another shockwave in the offing?
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Featured image: Getty Images
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