Gemini and Winklevoss Twins Face Fraud Lawsuit Over Unregistered Securities

• Investors filed a lawsuit against Gemini and its founders Tyler and Cameron Winklevoss, accusing them of fraud and other crimes.
• The lawsuit claims that Gemini offered unregistered securities in the form of interest-bearing accounts.
• Gemini refused to honor any further investor redemptions, thereby “wiping out” all investors who still had assets in the program.

Investors have filed a lawsuit against Gemini, the U.S. cryptocurrency exchange founded by Tyler and Cameron Winklevoss, and its founders, accusing them of fraud and other crimes. The lawsuit was filed Tuesday in Manhattan federal court, with investors alleging that Gemini offered unregistered securities in the form of interest-bearing accounts.

Gemini launched its high-yield program called Gemini Earn in 2015. This product worked like a cryptocurrency savings account, allowing clients to deposit their cryptocurrency in exchange for interest. However, the lawsuit claims that Gemini refused to honor any further investor redemptions, thereby “wiping out” all investors who still had assets in the program.

The lawsuit claims that Gemini’s failure to honor investor redemptions was due to the collapse of FTX, Alameda Research, and other crypto companies last month, which caused a liquidity problem at Genesis Global Capital. It is estimated that Genesis had $175 million invested in FTX prior to the bankruptcy filing of the exchange. As a result, Gemini immediately halted withdrawals for the interest-bearing contract.

Brendan Picha and Max J. Hastings, who are pursuing a class action lawsuit on behalf of other impacted Gemini investors, claim that Gemini and the Winklevoss twins violated the Exchange Act by offering unregistered securities. The lawsuit also claims that the Winklevoss twins and their crypto exchange defrauded people by not honoring investor redemptions.

It remains to be seen how this lawsuit will play out and how it will affect the Winklevoss twins and Gemini. However, it is clear that the Winklevoss twins and their cryptocurrency exchange are in hot water. Investors have accused the duo of fraud and other crimes, and the lawsuit claims that Gemini violated the Exchange Act by offering unregistered securities. It is yet to be seen if the Winklevoss twins and Gemini will be held accountable for their alleged actions.

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