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Crime and Investigations

Lawsuit Filed Against Gemini and BlockFi

Lawsuit Filed Against Gemini and BlockFi

Gemini is accused of providing BlockFi with misleading information and custodial services that helped market unregistered securities.

In recent news, a class-action complaint has been filed in the U.S. District Court for the District of New Jersey against cryptocurrency lender BlockFi and its founders, directors, and crypto exchange Gemini.

The complaint was filed by Trey Greene, an investor who claims that his nearly $2 million worth of funds has been frozen in bankrupt BlockFi.

According to the complaint, Greene accuses the defendants of multiple wrongdoings, including misleading information, violating consumer fraud and exchange acts, and offering and selling unregistered securities. The complaint alleges that Gemini provided BlockFi with custodial services and misrepresented information to help BlockFi market its alleged unregistered securities.

Greene claims to have invested over $1.5 million in interest accounts that are alleged to be unregistered securities, accruing over $400,000 in capital gains and earned interest that was re-invested. However, he cannot withdraw the funds after BlockFi froze all withdrawals on November 10, the same day FTX filed for bankruptcy.

Moreover, Greene claims that he was induced into buying the “unregistered securities” by BlockFi founders Zac Prince and Flori Marquez’s misrepresentations that the offerings were comparable to federally-insured bank products. The Securities and Exchange Commission charged BlockFi with “failing to register the offers and sales of its retail crypto lending product” on February 14. The filing claims that the exchange “admitted its [interest] accounts were unregistered securities” during the proceedings, which resulted in a $50 million settlement on February 15.

The complaint also alleges that Tyler Winklevoss’ Gemini previously held custody over BlockFi’s clients’ crypto holdings through its custodial services and misrepresented how accessible these funds were to customers. According to the complaint, Gemini knew of and acquiesced in the materially false and misleading statements about the status, safety, and accessibility of the plaintiff’s and class members’ assets at Gemini and about the risks of loss. The platform allegedly breached the exchange act but was not included in the other allegations.

READ MORE: Former FTX Director Pleads Guilty to Fraud Charges

Greene is seeking damages for each of the alleged counts, including “treble damages” for violations of the consumer fraud act, the costs of his lawyers to be covered, a full refund of all funds acquired by the defendants and accrued interest, as well as a judgment preventing similar violations of the consumer fraud act.

Those represented in the class action are any stockholders of BlockFi that purchased their unregistered Interest Accounts between March 4, 2019, and November 10, 2022. The defendants will be served with a summons and must respond to the complaint within 21 days of receiving it or be required to pay the full amount demanded by Greene. The case is expected to draw attention from those in the cryptocurrency community, as it highlights concerns regarding the legality and regulation of cryptocurrency investments.

Andrey Kunev

Reporter at CoinsPress

Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.

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