Gemini faces lawsuit for violating the U.S. Exchange Act

Crypto exchange Gemini and its founders, the Winklevoss twins, are facing a class-action lawsuit for allegedly not registering their interest-bearing accounts as securities and thereby violating the U.S. Exchange Act, according to a Tweet by crypto influencer ODELL.

The investors filed the lawsuit in the U.S. District Court for the Southern District of New York on Dec. 27. Referring to the interest-bearing accounts that Gemini offered according to the investors, the lawsuit states:

“Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest.”

The investors also claimed that the exchange withheld information concerning the risks associated with Gemini Earn and its partners related to the program.

Gemini promised up to 8% returns on investment, which it failed to provide due to Genesis Global’s liquidity issues resulting from the FTX collapse. On Dec. 5, the exchange formed a committee to tackle the liquidity problem affecting the Gemini Earn users.

In response, Gemini told Forbes that the exchange is “committed to providing a secure and compliant platform for our customers” and will be “vigorously defending itself against these baseless allegations.”