Key Takeaways
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As per the complaint filed against Gemini, “[Gemini] refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program.”
Investors have filed a lawsuit against Gemini and its Founders over allegations of committing fraud in the interest-bearing program, Gemini Earn.
Launched in 2021, Gemini Earn provided up to 8% interest on users’ crypto holdings. However, Gemini suspended the program after its key partner Genesis halted lending services as it faced a liquidity crisis following FTX’s collapse.
In the class action lawsuit filed with the Manhattan Federal Court, investors Brendan Picha and Max Hastings claimed that Gemini refused to honor redemptions to users of Gemini Earn.
According to the plaintiffs, Gemini provided yield-bearing accounts without registering them as securities, thus violating the Securities Exchange Act. They noted that had Gemini registered the products, they would have received suitable disclosures to gauge the risks of investing in Gemini Earn, adding,
"Plaintiffs and others similarly situated relied upon the misrepresentations and omissions made by Gemini in deciding to place their tokens in the Gemini Earn program."
Meanwhile, Gemini recently reassured its users that the firm is working with Genesis and Digital Currency Group (DCG) to resolve the issues with Gemini Earn. Gemini claimed it will provide a “more fulsome update” by the end of the week.
