Gemini sued by investors over alleged IPO misstatements and strategy pivot
Gemini shareholders have targeted the crypto exchange through a new class action lawsuit alleging that it misled investors during and after its initial public offering.
- Gemini has been hit with a class action lawsuit in New York alleging it misled investors in its IPO filings about its business strategy.
- Plaintiffs claim the firm shifted to a prediction markets model, cut 25% of staff, and exited key international markets shortly after listing.
- Shares have fallen sharply since the IPO, with investors alleging losses tied to what they describe as artificially inflated prices.
Filed in New York, the class action lawsuit has been brought against Gemini, its co-founders Tyler and Cameron Winklevoss, and other company executives over misleading claims made in its IPO documents.
Plaintiffs in the filing said the documents portrayed Gemini as a growing crypto exchange focused on expanding its user base and international footprint, but later made an “abrupt corporate pivot to a prediction market-centric business model.”
In the complaint, the plaintiff said the Offering Documents were “materially false and misleading” and failed to disclose that Gemini was “poised for an expensive and disruptive restructuring.”
Further, the lawsuit stated that the company had committed to extending into “key global markets.”
Gemini undergoes operational overhaul
Gemini held its IPO in September and priced shares at $28 on the Nasdaq; however, while the filings described the exchange as its “core product,” they subsequently pivoted to prediction markets called “Gemini 2.0.”
Subsequently, the firm also cut 25% of its workforce and exited several international markets like the UK, the EU, and Australia.
Per the complaint, such changes have caused the class group to suffer “significant losses and damages” as the stock price declined.
As such, the suit is seeking a jury trial and compensation for investors who bought shares at “artificially inflated prices” after the IPO.
Last month, several Gemini executives announced departures amid the company’s cost-cutting push; meanwhile, the exchange also shut down its NFT arm, Nifty Gateway, in February.
However, on Thursday, the company’s Q4 results showcased that the company’s revenue had risen 39%, which was beyond analyst expectations.
At the time of writing, Gemini shares had closed Thursday’s session up 0.81%, while it surged another 5.8% in after-market trading.
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