Investors Sue Gemini’s Winklevoss Twins Over Interest Accounts
Gemini Trust Co. has been caught in the crossfire over the prevailing liquidity crisis at crypto lender Genesis Global. In the latest development, investors have sued Gemini co-founders Tyler and Cameron Winklevoss over claims that the crypto exchange sold them interest-bearing accounts which failed to register as securities.
The investors have accused the Winklevoss twins of fraud and violations of the Exchange Act. On Tuesday, December 27, they also filed a class action lawsuit in the Manhattan federal court.
The cryptocurrency exchange had its own product Gemini Earn Trust which allowed investors to generate as much as 8% interest on their holdings. However, last month, Gemini had to suddenly suspend withdrawals for its Earn Product after its key partner, Genesis Global, faced a major liquidity crisis amid the contagion spread by the collapse of crypto exchange FTX. In their recent complaint, the investors noted:
Gemini “refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program”.
They further added that had the products been registered, investors would have received the disclosures in time helping them better assess the risks. Gemini has yet to respond to an email request from Bloomberg.
Gemini Working on Restructuring Plan
Amid the latest development, crypto exchange Gemini has swung into action. Last week on December 23, the Gemini website showed a message adding that the company is operating with “utmost” urgency. Genesis said that they are determined to resolve the liquidity issue and that “we will continue to work on your behalf around the clock through the holidays”.
Earlier this month, Gemini hired the law firm Kirkland & Ellis to resolve the issue and help recover customers’ funds. The Winklevoss twins also said that they would maintain utmost transparency on this matter.
Genesis Global owes a total of $1 billion to crypto exchange Gemini. The crypto exchange has set up a creditors committee to recover user funds.
