Discontented investors are reportedly suing Tyler and Cameron Winklevoss, the founders of the Gemini cryptocurrency exchange, for fraud and infringement of securities laws in relation to the interest-earning programme Gemini Earn.
The complaint, which was submitted on December 27 in U.S. District Court in Manhattan, claims that after suspending investor redemptions due to their exposure to failed trading firm Genesis Global Capital, the Winklevoss brothers refused to “honour any further investor redemptions.”
The plaintiffs claimed that because the products were not registered, they were unable to obtain disclosures to more fully understand the dangers associated with using Gemini Earn. Gemini Earn was developed to give users up to 8% interest on their cryptocurrency holdings when it was first introduced last year.
Midway through November, just after the first reports indicating FTX’s liquidity troubles, Gemini began experiencing significant problems on Gemini Earn.
Gemini Earn hasn’t been accessible to users since it stopped allowing withdrawals in November because the platform has millions of dollars stranded on Genesis. It was reported that Gemini customers may be owed up to $900 million by Genesis and its parent organisation, Digital Currency Group (DCG).
Cameron Winklevoss tweeted on December 20 that Gemini has developed a strategy for the creditor committee to address the liquidity problems at Genesis and DCG and recover the assets.
In a letter sent to customers on December 7, Genesis stated that it expected the withdrawal suspension to persist for another few weeks as it attempted to find a way to restore consumers’ assets. On November 16, the company stopped accepting withdrawals due to “unprecedented market turmoil” brought on by FTX’s demise.
