2 - 3 minute read
Crypto investors are suing the Winklevoss twins, founders of Gemini cryptocurrency exchange, over the firm’s interest-earning program, Gemini Earn. The lawsuit, filed in Manhattan federal court on December 27th, accuses the Winklevoss brothers of fraud and violations of securities laws. The plaintiffs allege that the products offered through Gemini Earn have not been registered, preventing them from receiving necessary disclosures to assess the risks of using the platform.
According to the complaint, the Winklevoss brothers have refused to “honor any further investor redemptions” after halting withdrawals due to exposure to troubled trading firm Genesis Global Capital. Since halting withdrawals in November, the Gemini Earn platform has remained unavailable for users, with millions of dollars reportedly stuck on Genesis.
Earn Update: Today, Houlihan Lokey presented a plan on behalf of the Creditor Committee to resolve the liquidity issues at Genesis and DCG and provide a path for the recovery of assets.— Cameron Winklevoss (@cameron) December 20, 2022
Gemini Earn was launched last year and promised to generate up to 8% interest on users’ crypto holdings. However, the platform has faced major issues since mid-November, shortly after reports emerged of liquidity issues at FTX. Gemini halted withdrawals in November, citing “unprecedented market turmoil” caused by the collapse of FTX, and has not yet resumed withdrawals. Some reports suggest that Gemini clients are owed as much as $900 million by crypto lender Genesis and its parent company, Digital Currency Group (DCG).
On December 20th, Cameron Winklevoss announced on Twitter 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. However, it is unclear when or if Gemini Earn will be available to users again. In the meantime, the lawsuit brings further scrutiny to the Winklevoss twins and their cryptocurrency exchange, which has already faced criticism for its slow response to the liquidity issues at Genesis and DCG. Gemini did not immediately respond to requests for comment.