Gemini Trust Co. and its founders, were sued by investors who claim the crypto asset exchange sold interest-bearing accounts which it failed to register as securities.
According to reports, investors are suing Tyler and Cameron Winklevoss, the creators of the cryptocurrency exchange Gemini, over the interest-earning program Gemini Earn.
According to a Bloomberg story, disgruntled investors have launched a lawsuit against crypto exchange 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 because of 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 were not registered, they were unable to obtain disclosures to more fully understand the dangers associated with using Gemini Earn.
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, or shortly after the initial rumors of FTX’s liquidity problems, Gemini began to have significant problems on 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. According to certain estimates, Gemini customers may be owed up to $900 million by cryptocurrency lender Genesis and its parent business Digital Currency Group (DCG).
Cameron Winklevoss said on Twitter on December 20 that crypto exchange has developed a strategy for the creditor committee to address the liquidity problems at Genesis and DCG and retrieve the asset.
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. On November 16, the company stopped accepting withdrawals due to “unprecedented market turmoil”” brought on by FTX’s demise.
