Gemini Trust Company And Its Founders Winklevoss Twins Sued For Duping Customers Of $900 Million

The Winklevoss twins -- Tyler and Cameron -- could be the next crypto kings to fall as they and their firm Gemini Trust Co. have been sued by investors.

In a proposed class-action complaint that was filed Tuesday in Manhattan federal court, the investors accused the crypto asset exchange and its founders of fraud and violations of the Exchange Act, reported Bloomberg. The investors claimed that the company sold interest-bearing accounts without registering them as securities.

The company that was launched in 2015, offers a high-yield product called Gemini Earn, as per Investing.com. It allowed its customers to deposit their cryptocurrency for interest that was similar to a bank account. Depending on the asset, it offered returns of between 0.45% and 8% on their holdings, reported Decrypt.

Last month, Gemini abruptly suspended withdrawals for Earn after Genesis Global, which is the exchange’s main partner, faced a liquidity crisis. It happened amid the market disturbances that were sparked by the collapse of Sam Bankman-Fried's FTX, Alameda Research, and many other crypto entities.

Previously, it was reported that Genesis Global and its parent company Digital Currency Group (DCG) owe users of Gemini Earn a whooping $900 million. The investors said in their complaint that Gemini “refused to honor any further investor redemptions," and that it effectively wiped out "all investors who still had holdings in the program.”

They also alleged that had the Gemini Earn product been registered, the investors would have got disclosures that would have allowed them to better assess the associated risks.

Earlier this month, the New York-based company turned to financial services company Houlihan Lokey. It acts as the financial advisor of the creditor committee. This was done to address the liquidity issues at Genesis and DCG and help in the recovery of assets. The exchange said last week that it continues to work with Genesis and DCG and is operating “with the utmost urgency,” with all parties remaining “engaged and collaborative.”

Sharing another update on Tuesday, Gemini said that the company “continued to work through the Christmas holiday towards a resolution.” Gemini also shared that “a more fulsome update” is expected by the end of this week.