The Winklevoss twins and their beleaguered cryptocurrency site Gemini were hit this week with a possible class motion lawsuit from a pair of disgruntled investors who accused them of fraud and other violations.
The grievance, filed by investors Brendan Pich and Max J. Hastings, alleges that Cameron and Tyler Winklevoss sold interest-bearing Gemini accounts without registering them as securities and fully warning customers of the potential risks.
Gemini is searching for to recuperate $900 million of customer funds held by its lending partner in interest-bearing accounts, Genesis, which has faced a liquidity crisis as a result of what it described as “unprecedented market turmoil” surrounding the collapse of FTX.
In accordance with the lawsuit filed on Tuesday, Gemini “refused to honor any further investor redemptions, effectively eliminating all investors who still held shares within the scheme.”
The Winklevoss twins founded Gemini in 2014. The pair became crypto kings after gaining notoriety for his or her legal war over Facebook with former Harvard classmate Mark Zuckerberg.
The “Gemini Earn” program presented itself as a technique to earn interest on digital currencies held. Winklevoss twins platform said participants could earn as much as 8% annual interest.
When Genesis faced potential insolvency last month, Gemini was forced to halt payouts to “Get Paid” accounts.
Picha and Hastings, who’re searching for class-action status on behalf of other affected Gemini customers, have accused the twins of promoting interest-bearing accounts “with repeated false and misleading claims, including that [accounts] were a protected approach to collecting interest.
Plaintiffs say clients can be aware of “needed and significant disclosures” in regards to the program’s potential risks if Gemini sold them as securities.
Along with fraud, the suit accused the Winklevoss twins of violating the Stock Exchange Act.
Gemini’s customer support agreement stipulates that any account disputes will likely be resolved by arbitration. Many consumers have already filed arbitration claims, in keeping with Bloomberg.
The agreement also indicates that the offers involved risks, including the potential “total loss” of a client’s investment.
The Post contacted Gemini for comment on the lawsuit.
Gemini frequently updates the status of its “Earn” accounts on its website – the most recent of which was posted on Tuesday.
“We continued to work on an answer over the festive period. We expect a more extensive update by the top of this week.