Crypto Billionaires Winklevoss Twins Accused of Fraud and Securities Law Violations by Investors
Crypto billionaires and founders of the Gemini cryptocurrency exchange, Tyler and Cameron Winklevoss, are being sued by investors over their interest-earning program Gemini Earn.
In a proposed class-action complaint filed Tuesday in Manhattan federal court, crypto investors accused the Winklevoss twins and their exchange of fraud and violations of the Exchange Act, arguing that the platform failed to register their interest-earning accounts as securities.
Gemini Trust Earn program offered high-interest accounts, allowing investors to lend their crypto assets to Gemini in exchange for as much as 8% interest payments.
However, the platform halted redemptions in mid-November after Genesis Global, a subsidiary of Digital Currency Group and a key partner of Gemini, became ensnared in the crypto contagion caused by the implosion of Sam Bankman-Fried’s FTX.
Gemini “refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program,” the investors said in the complaint. They argued that if the platform had registered the products, they would’ve received disclosures that would have let them assess the risks better. 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."
Ever since the exchange halted withdrawals, Gemini Earn remains unavailable for users as the platform has
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