BlockFi execs, Gemini named in proposed lawsuit by a disgruntled investor

An capitalist with astir $2 cardinal worthy of funds frozen successful bankrupt cryptocurrency lender BlockFi has filed a people enactment ailment against its founders, 2 directors and crypto speech Gemini.

In a Feb. 28 ailment filed successful the U.S. District Court for the District of New Jersey, capitalist Trey Greene accused the defendants of galore wrongdoings, including violating the user fraud and speech acts, breaching its fiduciary duties, arsenic good arsenic offering and selling unregistered securities.

“The unregistered securities sold by the BFI [BlockFi] Defendants connected behalf of BlockFi were marketed and sold via a dependable watercourse of misrepresentations and worldly omissions by Prince and Marquez implicit respective years and done intermittent misrepresentations by Defendant Gemini.”

Greene claims helium invested implicit $1.5 cardinal successful involvement accounts which are alleged to beryllium unregistered securities, and accrued implicit $400,000 successful superior gains and earned involvement which was re-invested.

He is presently incapable to retreat the funds, however, aft BlockFi froze each withdrawals connected Nov. 10, 2022 — the aforesaid time FTX filed for bankruptcy.

Filing of the projected people enactment lawsuit. Source: Bloomberg Law

Greene further claims that helium was induced into buying the “unregistered securities” by misrepresentations from BlockFi’s founders Zac Prince and Flori Marquez that the offerings were comparable to federally-insured slope products.

While the Securities and Exchange Commission (SEC) had charged BlockFi with “failing to registry the offers and income of its retail crypto lending product,” connected Feb. 14, the filing claims the speech had “admitted its [interest] accounts were unregistered securities” during the proceedings that resulted successful a $50 cardinal settlement connected Feb. 15.

Related: FTX ex-director Nishad Singh pleads blameworthy to fraud charges

Tyler Winkevoss’ Gemini antecedently held custody implicit BlockFi’s clients’ crypto holdings done its custodial services, and is alleged to person misrepresented however accessible these funds were to customers.

“Gemini knew of, and acquiesced in, the materially mendacious and misleading statements astir the presumption the information and accessibility of Plaintiff’s and people members’ assets astatine Gemini and astir the risks of loss. Gemini supplied materially mendacious and misleading accusation to BlockFi for usage successful selling the BIAs [BlockFi involvement accounts].”

Gemini is alleged to person breached the speech enactment but was not included successful the different allegations.

Greene is seeking damages for each of the alleged counts, including "treble damages" for violations of the user fraud act, the costs of his lawyers to beryllium covered, a afloat refund of each funds acquired by the defendants and accrued interest, arsenic good arsenic a judgement preventing akin violations of the user fraud act.

Those represented successful the people enactment are immoderate stockholders of BlockFi that purchased their BlockFi unregistered BlockFi Interest Accounts between Mar. 4, 2019 and Nov. 10, 2022

The defendants volition beryllium served with a summons, and indispensable respond to the ailment wrong 21 days of receiving it oregon beryllium required to wage the afloat magnitude demanded by Greene.

Cointelegraph has reached retired to Gemini and BlockFi but did not person a effect by the clip of publication.