Acquiring digital assets is all the rage these days, but investors must be careful where they invest their money. Just look at the allegedly dysfunctional crypto exchange platform, Gemini.
On or around Nov. 16, 2022, Gemini’s Earn program was abruptly shut down, leaving investors in the lurch. The program allowed clients to lend cryptocurrency assets to other clients at interest rates as high as 7.4%.
How It All Fell Apart
But the fly in the ointment here was that the company failed to do what federal securities laws demand – register the digital assets on loan as securities. That became a huge problem when Gemini’s lender, Genesis Trading, had extreme liquidity problems after another crypto exchange platform, FTX, filed for bankruptcy protection.
Both CoinDesk and Genesis Trading are under the corporate umbrella of Digital Currency Group.
The plaintiffs’ filing included the following allegations:
"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 . . . [and] refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program, including plaintiffs."
Unstable Markets Create Chaos by Not Following the Rules
The Securities and Exchange Commission (SEC) has rules in place to prevent wildly fluctuating markets caused by incidents just like this one. When markets are severely destabilized, investors get nervous and try to pull out their money, worsening the situation.
But if a company is derelict in its duties and never registers the digital assets as securities, when these inevitable financial liquidity problems arise, it's a bloodbath for those left holding the (empty) bag.
Could You Also Have a Gemini Claim?
If you play the crypto markets, you might indeed have a cause of action to join the Gemini class lawsuit. Alternatively, you could have a separate claim if their actions or inactions caused you other damages or losses.
If this case gets certified with class-action status, as it appears it will be, you could be eligible to join as a fellow claimant and plaintiff.
What Other Forms of Legal Redress Are Available in Similar Circumstances?
There is always a civil path to justice that aggrieved plaintiffs can use to pursue recovery of lost assets and for other damages. But, first, you have to determine the correct entity to sue.
Suppose your hypothetical legal beef was with the Digital Currency Group for some form of financial malfeasance. You would then need to sort through at least 34 entries on a single site to try to narrow down your target defendant.
If you make a mistake and file against the wrong company, you will then need to refile and pay additional filing fees, court costs, and other potential expenses.
Avoid Exorbitant Attorneys' Fees By Using Dispute
People leave money on the table and fail to resolve legal matters they could easily win because of the expense involved with suing companies that wrong them. And you can be sure that the companies know that and take full advantage of the fact when it comes to separating their clients from their hard-earned dollars.
Dispute can change that outcome. Not only do they offer e-scribes services that are affordable, but you also don't have to leave the comfort of your home to access their services.
A few button clicks will lead you right to the type of assistance you need. It all begins with a professional demand letter. Choose one of the handy templates that most closely mirrors your legal circumstances.
Chances are good that will lead to a satisfactory solution, as only about 20% of cases actually get resolved in a courtroom setting.
Dispute works fast, too. You may have your money in your bank account within days or perhaps a couple of weeks. All of this can be accomplished without retaining a lawyer if you allow Dispute to help you get legal justice against Gemini.