The case was filed in Manhattan on Tuesday. The suit claims that Gemini sold high-interest accounts through a program called Gemini Earn, and that investors lent the money to the high-interest accounts. The Picha et al argue that the accounts were not registered as securities before they were sold to investors. There is a complaint.
Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest. Gemini also omitted and concealed significant information concerning the risks associated with Gemini Earn, including information concerning its so-called partner and borrower in connection with the program, Genesis Global Capital, LLC (“Genesis”), to which it gave all Gemini Earn investors’ crypto assets. When Genesis encountered financial distress as a result of a series of collapses in the crypto market in 2022, including FTX Trading Ltd. (“FTX”), Genesis was unable to return the crypto assets it borrowed from Gemini Earn investors
Potential investors were promised 8% interest in these accounts, which was a lucrative promise. After the collapse of FTX, the company paused withdrawals and caused investors to liquidate their assets.
The complaint says that at this time,Gemini stopped the program and refused to honor any further investor redemptions. According to a report from Decrypt, Genesis could owe a lot of money.
We are working with Genesis and DCG and are doing everything we can to get things done. The statement was published last week. The company wrote in a statement on December 27 that they continued to work towards a resolution during the Christmas holiday. There will be a more detailed update by the end of the week.
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