The founders of cryptocurrency exchange, Gemini, Tyler and Cameron Winklevoss, are reportedly facing a new lawsuit from investors over the interest-earning program Gemini Earn.
The lawsuit, filed on December 27th in Manhattan federal court, alleges that the Winklevoss brothers refused to honour any further investor redemptions after halting them due to exposure to troubled trading firm Genesis Global Capital.
The plaintiffs claim that the products have not been registered, preventing them from making a proper risk assessment for using Gemini Earn.
Gemini Earn was launched last year and was designed to generate as much as 8% in interest on crypto holdings. However, the platform faced major issues in mid-November, shortly after reports emerged of liquidity issues at FTX.
As a result, withdrawals on Gemini Earn were halted and the platform remains unavailable for users, with millions of dollars reportedly stuck on Genesis. According to some reports, crypto lender Genesis and its parent company Digital Currency Group (DCG) owe up to $900 million to Gemini clients.
On December 20th, Cameron Winklevoss took to Twitter to announce that Gemini had come up with a plan on behalf of the creditor committee to resolve the liquidity issues at Genesis and DCG and recover the assets.
This followed a letter from Genesis to its customers on December 7th, claiming that the withdrawal freeze was likely to last a few weeks while a solution was sought to recover users’ assets. The freeze had been implemented on November 16th, citing “unprecedented market turmoil” caused by the collapse of FTX.
As crypto progresses deep into its winter it remains to be seen how the case will progress and whether the plaintiffs will be successful in their claims. The Winklevoss twins will no doubt be hoping that their exchange weathers the incoming storm.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.