Law firm Pomerantz has filed a class-action lawsuit in the Supreme Court of the State of New York, against crypto exchange Gemini on behalf of investors harmed by Gemini Earn or Gemini Interest Accounts (GIAs). Gemini’s yield-bearing GIAs allowed investors to lend their assets to “accredited borrowers”. In the cases pertaining to the lawsuit filed by Pomerantz, the accredited borrower is Genesis Global Capital.
Genesis is a subsidiary of the crypto conglomerate Digital Currency Group (DCG). The collapse of FTX left it with $175 million worth of assets locked in the beleaguered crypto derivative exchange.
“On November 14, 2022, Gemini sent an email assuring its customers that Gemini had no exposure to FTT tokens or Alameda and no material exposure to FTX,” a press release from Pomerantz informed.
However, in another communication on November 14, Gemini informed the investors in Gemini Earn program that Genesis had paused withdrawals as it was facing a liquidity crisis. Subsequently, Gemini also suspended withdrawals from the Gemini Earn program. As per reports, Genesis’ actual exposure to FTX and Alameda Research was to the tune of $1.8 billion, the release added.
“As a result of Defendants’ wrongful acts and omissions, investors in Gemini Earn and GIAs have suffered significant losses and damages,” Pomerantz said in its lawsuit.
Early this month, United States SEC filed complaints against Gemini and Genesis Global Capital for offering unregistered securities through the Gemini Earn program and sought disgorgement, civil penalties, and front-end interest.
Last week, Genesis filed for Chapter 11 bankruptcy.