Plaintiffs have alleged that the products have not been registered, which prevented them from receiving disclosures to better assess the risks of using Gemini Earn.
Tyler and Cameron Winklevoss, founders of Gemini cryptocurrency exchange, are reportedly facing a new lawsuit from investors over interest-earning program Gemini Earn.
Disgruntled investors have filed a lawsuit against Gemini founders, accusing the firm of fraud and violations of the securities laws, according to a report by Bloomberg.
Filed on Dec. 27 in Manhattan federal court, the complaint states that Winklevoss brothers refused to “honor any further investor redemptions” after halting those due to exposure to troubled trading firm Genesis Global Capital.
The plaintiffs alleged that the products have not been registered, which prevented them from receiving disclosures to better assess the risks of using Gemini Earn. Launched last year, Gemini Earn platform was designed to generate as much as 8% in interest on their crypto holdings.
Gemini started facing major issues on Gemini Earn in mid-November, or shortly after the first reports indicated FTX’s liquidity issues.
Since halting withdrawals in November, Gemini Earn remains unavailable for users as the platform has millions of dollars stuck on Genesis. According to some reports, Crypto lender Genesis and its parent company Digital Currency Group (DCG) allegedly owe up to $900 million to Gemini clients.
On Dec. 20, Cameron Winklevoss took to Twitter to announce that Gemini came up with a plan on behalf of the creditor committee to resolve the liquidity issues at Genesis and DCG and recover the assets.
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
Related: Genesis and DCG seek path for the recovery of assets amid liquidity issues
On Dec. 7, Genesis issued a letter to its customers claiming that its withdrawal freeze was likely to last a few weeks to come up with a solution to recover users’ assets. The firm halted withdrawals on Nov. 16, citing “unprecedented market turmoil” caused by the collapse of FTX.
Gemini did not immediately respond to Cointelegraph’s request for comment.
