Crypto exchange Gemini is facing a proposed class action lawsuit filed Thursday in a Manhattan federal court, with shareholders alleging the company misled investors during and after its initial public offering. The suit names co-founders Tyler and Cameron Winklevoss along with other company executives as defendants. Plaintiffs claim that documents tied to the IPO contained misleading statements about the company’s direction and strategy.
Lead plaintiff Marc Methvin alleges that Gemini’s IPO materials presented the exchange as a growing platform focused on expanding its user base and international presence. The complaint contends that this portrayal was inconsistent with what followed — an abrupt shift toward a prediction-market-focused business model. Investors say they were not adequately informed of this strategic change before purchasing shares.
Gemini conducted its IPO in September, listing shares at $28 on the Nasdaq. The stock briefly reached $40 but has since declined more than 80%, trading at approximately $6 on Thursday. The plaintiffs are seeking a jury trial and financial damages for investors who purchased shares at what the complaint describes as artificially inflated prices in the period following the offering.
According to the lawsuit, Gemini executives publicly emphasized international expansion in November, stating the company was committed to entering key global markets. However, in early February, the Winklevoss brothers announced a pivot to prediction markets under the name Gemini 2.0. The company simultaneously announced it would reduce its workforce by 25% and withdraw from markets in the EU, the UK, and Australia.
The departures of three senior executives followed later that month, with the company’s chief financial officer, chief operations officer, and chief legal officer all leaving the firm. The lawsuit also notes that Gemini reported a roughly 40% increase in operating expenses during this period. These developments compounded concerns among shareholders about the company’s financial trajectory.
The complaint states that the cumulative effect of these changes caused the class group to suffer significant losses and damages. Gemini’s stock reached an all-time low of $5.82 on February 20, according to the filing. The sharp decline is central to the plaintiffs’ argument that the IPO documents failed to accurately represent the company’s actual plans and financial condition.
Despite the legal pressure, Gemini reported on Thursday that its fourth-quarter revenues rose 39% year-on-year to $60.3 million, surpassing analyst expectations of $51.7 million. The company has not publicly commented on the lawsuit. The case is proceeding in federal court, where plaintiffs are pursuing compensation on behalf of all affected shareholders.
Originally reported by CoinTelegraph.
