Gemini is facing a proposed class-action lawsuit in New York, with investors alleging the crypto exchange misled them during and after its September initial public offering.
Filed Thursday in a Manhattan federal court, the complaint names Gemini, co-founders Cameron and Tyler Winklevoss, and several executives. It claims the company made misleading statements in its IPO filings about its business strategy and growth plans.
Lead plaintiff Marc Methvin argues that Gemini was presented as a rapidly expanding crypto exchange focused on growing its user base and global presence. Instead, the company allegedly made an abrupt shift toward a prediction market–focused model.
Gemini went public in September at $28 per share on the Nasdaq, briefly climbing to $40 before plunging more than 80% to around $6 by Thursday. The lawsuit seeks damages for investors who purchased shares at what it describes as “artificially inflated” prices.
Strategy shift at center of claims
The complaint states that as recently as November, Gemini executives emphasized international expansion and a commitment to entering key global markets. IPO documents also described the exchange as the company’s core business.
However, in early February, the Winklevoss brothers unveiled a strategic pivot to prediction markets under the “Gemini 2.0” initiative. Around the same time, the company announced plans to cut 25% of its workforce and withdraw from the EU, UK, and Australian markets.
The lawsuit also notes a wave of executive departures later that month, including the chief financial officer, chief operating officer, and chief legal officer, alongside a reported 40% increase in operating expenses.
According to the filing, these developments led to significant investor losses, with Gemini’s stock falling to a low of $5.82 by Feb. 20.
Gemini reported on Thursday that its Q4 revenues rose 39% year-on-year to $60.3 million, beating analyst expectations of $51.7 million.
