Will the Winklevoss twins be the next crypto kings to fall? Investors launch class-action fraud lawsuit against brothers alleging they swindled clients out of $900 million
- The Winklevoss twins’ crypto platform, Gemini, halted withdrawals in November
- Nearly $1 billion owed by Genesis crypto lending platform
- Gemini Investors Say They Didn’t Know Their Money Wasn’t Safe
- Two launched a class-action lawsuit calling on all Gemini investors to sue
- The collapse of Genesis and, in turn, Gemini is linked to the fall of FTX
Cryptocurrency investors who put up money with the Winklevoss twins and their Gemini platform are being asked to sue the brothers in a newly filed class action lawsuit that links the duo and their businesses to the FTX collapse.
Two investors – Brendan Picha and Max J. Hastings – filed a class-action lawsuit in New York City on Tuesday, claiming they were barred from investing earlier this year.
The lawsuit describes how the pair and others bought Gemini interest accounts – ‘GIAs’ – which they thought were secure parking and interest collection spots for their crypto assets.
Instead, they claim that the Winklevoss twins — worth a combined $6 billion — fraudulently sold these assets to crypto lender Genesis Global Capital.
When FTX collapsed in November and sent shock waves through the cryptocurrency world, Genesis was left broke and Gemini, the Winklevoss company, was left trying to recoup $900 million.
Cameron and Tyler Winklevoss are being sued by two of their Gemini Earn clients. Gemini Earn lost $900 million in November when FTX and Genesis Capital, a crypto lending platform it traded with, collapsed.
Two Gemini Earn investors, Brendan Picha and Max Hastings, are suing the twins, claiming they are among dozens, if not hundreds, of investors who have lost money.
Tuesday’s lawsuit is the first sign of legal trouble for the pair since the accident.
This follows the indictment of FTX founder Sam Bankman-Fried, who is currently under house arrest in California awaiting trial on eight counts of fraud and money laundering.
Prosecutors say he used FTX as a ‘personal piggy bank’, funneling money to his other company, Alameda.
The Winklevoss twins have yet to respond to the lawsuit.
On Gemini’s website they state that they are working day and night to get the investment back to the GIA holders and seem to put all the blame on Genesis.
In the most recent update they said, ‘We are continuing to work through the Christmas break towards a resolution.
‘We expect a more complete update by the end of this week.’
The lawsuit describes how investors were allegedly led to believe that holding a GIA was a safe and risk-free way to earn interest on crypto assets.
Fallen FTX founder Sam Bankman-Fried is now under house arrest at his parents’ California home. He is facing spending the rest of his life in prison on money laundering and fraud charges.
“Gemini marketed GIAs with repeated false and misleading statements, including that GIAs were a secure method of collecting interest,” the lawsuit reads.
Instead, the lawsuits describe the accounts as “unregistered and highly speculative securities.”
‘When Genesis encountered financial difficulties as a result of a series of cryptocurrency market meltdowns in 2022, including FTX Trading Ltd, Genesis was unable to return the crypto assets it borrowed from Gemini Earn investors.
“The Winklevosses, by virtue of their control of Gemini during Class Period, had the power and authority to direct the management and activities of Gemini and its employees, and to cause Gemini to engage in the unlawful conduct detailed here “, says the lawsuit.
Gemini’s website is full of panic statements assuring investors that they will be cured.
Hastings claims he held the equivalent of $60,073 in Bitcoin cash in his GIA, while Picha’s balance, as of Nov. 18, was listed at just $6.
The pair, however, invite everyone else who has parked their Bitcoin tokens with Gemini to join them, which could lead to a total loss of nearly $1 billion.
The Winklevoss twins started with Facebook.
They sued Mark Zuckerberg, claiming he stole their idea for the social media that changed the world, and used much of the $65 million settlement from that case to buy early cryptocurrency in the industry.
They founded Gemini in 2014.
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