Winklevoss Twins Sued by Gemini Investors Over $900M Crypto Crisis

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The Winklevoss twins and their embattled cryptocurrency site Gemini were slapped this week by a potential class action lawsuit from a pair of disgruntled investors who accused them of fraud and other violations.

The lawsuit filed by investors Brendan Picha and Max J. Hastings alleges that Cameron and Tyler Winklevoss sold interest-bearing accounts on Gemini without registering them as securities and without fully alerting clients to potential risks.

Gemini is working to recover $900 million in client funds held by its lending partner on interest-bearing accounts, Genesis, which has faced a liquidity crunch due to what it described as unprecedented turmoil on the market related to the collapse of FTX.

Gemini refused to honor any further investor buyouts, effectively wiping out any investors who still held stakes in the program, according to the lawsuit filed Tuesday.

The Winklevoss twins founded Gemini in 2014. The pair became crypto kingpins after gaining notoriety for their legal war against Facebook with former Harvard schoolmate Mark Zuckerberg.

Cameron and Tyler Winklevoss are best known for their legal battle with Mark Zuckerberg. Bloomberg via Getty Images

The Gemini Earn program billed itself as a way for customers to earn interest on their digital currency holdings. The Winklevoss twins platform said participants could earn up to 8% annual interest.

When Genesis faced potential insolvency last month, Gemini was forced to stop withdrawals from Earn accounts.

Picha and Hastings, who are seeking class action status on behalf of other Gemini clients affected by the situation, accused the twins of marketing the interest-bearing accounts with repeated false and misleading statements, including that the [accounts] were a safe method of collecting interest.

Gemini made layoffs over the summer as crypto prices plunged. Bloomberg via Getty Images

The plaintiffs claim that customers would have been aware of necessary and meaningful information about the programs’ potential risks if Gemini had marketed them as titles.

Besides fraud, the prosecution charged the Winklevoss twins with violations of the Exchange Act.

The Geminis Customer Service Agreement states that any account disputes will be resolved by arbitration. A number of clients have already filed for arbitration, according to Bloomberg.

The agreement also indicates that the offers involved risks, including a potential total loss of the customers’ investment.

The Post has contacted Gemini to comment on the lawsuit.

Gemini has provided regular updates on the status of its Earn accounts on its website, the most recent of which was posted on Tuesday.

We continued to work over the Christmas holidays to find a solution. We expect a more comprehensive update by the end of this week, the update says.

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