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A lawsuit against the leaders of BlockFi and Gemini

The leaders of the bankrupt cryptocurrency lender and those of the exchange platform are cited in a kind of criminal association.  In a complaint filed on February 28, Gemini is accused of providing BlockFi with custodial services and misleading information to help it market unregistered financial securities.

Disgruntled Investor Files Lawsuit Against BlockFi and Gemini

The investor is believed to have nearly $2 million in funds frozen in bankrupt cryptocurrency lender BlockFi.  He filed a class action lawsuit against the founders of the exchange, two administrators and the crypto exchange Gemini.  In the lawsuit filed February 28 in the U.S. District Court for the District of New Jersey, investor Trey Greene accuses the executives of these two companies of numerous wrongdoings.  This includes violating fraud and consumer exchange laws.  And for breaching fiduciary duties, as well as offering and selling unregistered products.

“Unregistered securities sold by BFI [BlockFi] on behalf of BlockFi have been marketed and sold via a steady stream of material misrepresentations and omissions by Prince and Marquez over several years and intermittent misrepresentations by Gemini he wrote in the complaint.  Greene claims to have invested more than $1.5 million in interest accounts believed to be unregistered securities.  He also reports having accumulated more than $400,000 in capital and interest gains and then reinvesting them.  Which brings his investment to nearly $2 million.

Since last November, BlockFi has frozen all Withdrawals.

The investor is now unable to withdraw his funds.  This is because it is currently not possible to withdraw funds from BlockFi.  The exchange froze all withdrawals on Nov. 10, the same day FTX filed for bankruptcy.  Greene further assures that he was enticed to buy the “unregistered securities”.  This is due to misrepresentations by BlockFi founders Zac Prince and Flori Marquez.  They would have reassured him that the offers were comparable to banking products insured by the federal government.

As for Tyler Winkevoss’ Gemini, the platform that previously held custody of BlockFi clients’ crypto assets, it allegedly distorted the accessibility of those funds to clients.  “Gemini was aware of and accepted the materially false and misleading statements about the security status and accessibility of the Plaintiff’s and Class Members’ assets at Gemini and the risks of loss.  Gemini provided materially false and misleading information to BlockFi for use in marketing BIAs, BlockFi Interest Accounts,” the class action believes.

Thus, Gemini is accused of violating the law on exchanges, but was not included in the other allegations.  Greene seeks damages on each of the alleged counts, including “treble damages.”  These for violations of consumer fraud law.  The costs of his lawyers to cover.  A full refund of all funds acquired by BlockFi and interest.  It also requires that a judgment be rendered to prevent similar breaches of fraud law.
What about class action?
The people represented in the class action are all shareholders of BlockFi.

  They purchased their unregistered BlockFi Interest Accounts between March 4, 2019 and November 10, 2022.

BlockFi and Gemini executives will receive a subpoena.  They must respond to the complaint within 21 days of receiving it.  Otherwise, they will be required to pay the total amount demanded by Greene.  As a reminder, on February 14, the exchange admitted that its interest accounts were unregistered securities.  Following this complaint, former BlockFi customers may finally get their funds back.

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