Investors filed a class action against the bitcoin exchange Gemini and its founders Tyler and Cameron Winklevoss for selling unregistered securities in the form of Earn interest-bearing accounts.
In a complaint filed in the Southern District of New York, the company and its founders were accused of fraud and violations of the securities laws.
The Earn lending product offered investors yields up to 8% per year on deposits. In mid-November Gemini halted payments under the program. This occurred amid financial difficulties of its main partner — OTC platform Genesis Global Capital.
According to media reports, the firm and its parent Digital Currency Group (DCG) owed Gemini customers $900 million.
On December 23, Gemini заверила that it continues to seek a solution jointly with Genesis and DCG, despite the holiday period.
“We will continue to work over the Christmas holidays to find a solution. A fuller update is expected by the end of the week,” according to a statement dated December 27.
Investors stated in the suit that Gemini “refused to make any payments, effectively wiping out the remaining assets in the program.” They argue that with proper registration the products would have received fuller disclosure and investors could better assess the risks.
On December 15 the exchange reported a data breach involving user data as a result of a series of phishing attacks.
The following day the platform closed for planned maintenance, which dragged on for about 7.5 hours. Gemini repeatedly pushed back the time for resuming user services.
In June, the U.S. Commodity Futures Trading Commission filed suit against the exchange. According to the regulator, Gemini misled it regarding bitcoin futures.
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