Key Takeaways:
- A new lawsuit against Tyler and Cameron Winklevoss focuses on Gemini Earn.
- The plaintiffs asserted that they were powerless to obtain more specific disclosures.
The interest-earning scheme Gemini Earn is the subject of a new lawsuit against Tyler and Cameron Winklevoss, the creators of the cryptocurrency exchange Gemini.
Disgruntled investors have reportedly filed a lawsuit against the Gemini founders, accusing the company of fraud and breaking securities regulations. The complaint, which was submitted on December 27 in Manhattan federal court, claims that after stopping investor redemptions owing to their exposure to failed trading firm Genesis Global Capital, the Winklevoss brothers refused to “honor any future investor redemptions.”
The plaintiffs claimed that because the goods are yet to be registered, they could not get disclosures to assess the risks associated with using Gemini Earn more accurately. The Gemini Earn platform, which was introduced last year, was created to allow users to earn up to 8% interest on their cryptocurrency holdings.
Midway through November, shortly after the initial news of FTX’s liquidity problems, Gemini began to experience severe problems with Gemini Earn.
Gemini Earn hasn’t been accessible to customers since it stopped allowing withdrawals in November because the platform has millions of dollars stranded on Genesis. According to specific estimates, Gemini customers may be owed up to $900 million by cryptocurrency lender Genesis and its parent business, Digital Currency Group (DCG).
The exchange has encountered legal issues previously. In June, Gemini was sued by the CFTC for its Bitcoin Futures. In 2017, the cryptocurrency exchange run by the Winklevoss Twins attempted to launch the first Bitcoin futures contract in the US. Years later, the regulatory body said that the exchange gave false information in an effort to introduce the product.
The exchange stated on December 23 that it is collaborating with Genesis and DCG and acting with the “utmost haste.” It guaranteed that everyone would continue to cooperate and be involved. They actually kept working to find a solution throughout the holidays.
Cameron Winklevoss said on Twitter on December 20 that Gemini has developed a strategy for the creditor committee to address the liquidity problems at Genesis and DCG and retrieve the assets.
Genesis wrote to its customers on December 7 to inform them that it would likely impose a withdrawal freeze for a few weeks while it worked to find a way to retrieve consumers’ cash. However, the company stopped withdrawals on November 16 due to “extraordinary market turbulence” brought on by FTX’s demise.
