Crypto Exchange Gemini Sued by Investors Over Interest Compensation Scheme

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Crypto exchange Gemini is being sued by investors over the sale of its interest-earning crypto products, according to court filings on Tuesday.

Investors Brendan Picha and Max J. Hastings filed a class action lawsuit on behalf of themselves and “others likewise” in the Court for the Southern United States District of New York. They are asking for a jury trial, according to the complaint.

Picha and Hastings claim that Gemini’s Earn program, which offered clients up to 7.4% interest for lending their crypto assets, failed to register those assets as securities under US securities law. securities. The filing says Gemini abruptly halted the program around Nov. 16 after crypto exchange FTX filed for bankruptcy and contagion from its downfall caused a liquidity crunch at Genesis Trading, which operated as the borrower of Gemini. Genesis is owned by Digital Currency Group, which is also the parent company of CoinDesk.

Read more: Crypto exchange Gemini suffers $485 million outflow rush amid contagion fears

“When Genesis ran into financial difficulties following a series of crypto market crashes in 2022, including FTX Trading Ltd. (FTX), Genesis was unable to return the crypto assets that it borrowed from Gemini Earn investors,” the filing said, adding that after the Gemini Earn program was terminated, the company “refused to honor any further investor redemptions, thereby eliminating all investors who held more stakes in the program, including the plaintiffs”.

Crypto firms that suffered financial woes following the market downturn and the collapse of top companies like FTX and Terraform Labs earlier this year are now facing a barrage of lawsuits from cryptocurrencies. investors trying to recoup their losses.

Gemini did not immediately respond to a request for comment.

Read more: Genesis and Gemini get withdrawals halted as FTX contagion spreads

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