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Gemini Crypto is facing a lawsuit.
Shareholders have initiated a class-action suit in federal court in Manhattan, alleging that the exchange misled investors during its IPO in September.
The lawsuit targets the company itself as well as the Winklevoss twins. The claim is that Gemini raised funds based on a narrative of growth, only to quietly abandon it for prediction markets and cost reductions as soon as the capital was secured.
The stock performance illustrates the situation. After reaching a post-IPO peak of $40, it has now fallen to approximately $6. This represents an 80% decline, prompting those who invested to seek explanations.
Key Takeaways
- Lawsuit Details: Plaintiff Marc Methvin has filed the class-action in Manhattan, accusing Gemini executives of deceiving shareholders regarding the company’s business strategy.
- Stock Collapse: Following an IPO price of $28 and a peak of $40, Gemini shares traded on Nasdaq have dropped over 80%, now hovering around $6.
- Strategic Pivot: The complaint asserts that Gemini had secretly intended to shift from its primary exchange offering to a prediction market model while reducing staff and withdrawing from significant markets.
The Mechanics of the Bait-and-Switch Allegation: What the Lawsuit Claims
The crux of the lawsuit revolves around the discrepancy between what Gemini communicated to investors and its actual actions.
Gemini debuted on Nasdaq in September at $28, promoting global expansion, user growth, and a central exchange designed for international scalability. Shareholders invested based on this narrative. However, the story changed rapidly.
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By November, executives continued to emphasize key global markets. By February, the Winklevoss brothers abandoned the entire narrative.
They introduced Gemini 2.0, a shift towards prediction markets, along with a 25% reduction in workforce. Subsequently, they exited markets in the EU, UK, and Australia—regions previously highlighted as growth opportunities.
Expectations are building for a rate cut
There’s a 37% probability the June FOMC will cut 25bps
Powell has been the last line holding rates as President Trump publicly pushed to lower
June is also the first Fed meeting where Powell is not acting chair pic.twitter.com/xnAO7eIaQT— Gemini (@Gemini) March 18, 2026
The plaintiff contends that this was not merely a response to market conditions but rather a deliberate strategic shift that rendered the IPO materials misleading from the outset.
If internal communications contradict the information presented in the prospectus, it poses a significant issue. Dismissing a misleading disclosure allegation becomes challenging when the documentation is unfavorable.
The regulatory landscape does not favor Gemini in this situation either. When shareholder litigation pertains to securities law, the law remains rigid regardless of sentiment. This case differs from the Earn program settlement, which involved unregistered securities; this case questions whether investors were sold a business model that was already being forsaken.
The transition to prediction markets sacrifices a broad addressable market for a speculative niche. Gemini has limited its own potential, and the stock reflects this reality.
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