Investors Sue Gemini’s Winklevoss Twins Over Interest Accounts

Bhushan Akolkar
December 28, 2022
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Winklevoss Twins Push Back Against CFTC Rule To Ban Event Contracts

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.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.