Defrauded Investor Blackfin filed lawsuit against Gemini Directors
2023.03.02 02:28
Defrauded Investor Blackfin filed lawsuit against Gemini Directors
By Tiffany Smith
Budrigannews.com – A class action lawsuit has been filed against BlockFi’s founders, two directors, and cryptocurrency exchange Gemini by an investor who has frozen funds worth nearly $2 million.
Investor Trey Greene filed a complaint against the defendants on February 28 in the U.S. District Court for the District of New Jersey. In the complaint, he claimed that the defendants had committed numerous wrongdoings, including violating the consumer fraud and exchange acts, breaching its fiduciary duties, and selling securities that were not registered.
“The unregistered securities sold by the BFI [BlockFi] Defendants on behalf of BlockFi were marketed and sold via a steady stream of misrepresentations and material omissions by Prince and Marquez over several years, as well as through intermittent misrepresentations by Defendant Gemini,” according to the court.
Greene asserts that he re-invested over $400,000 in capital gains and earned interest that he had invested in interest accounts that he believed to be unregistered securities.
However, BlockFi froze all withdrawals on November 10, 2022, the same day that FTX filed for bankruptcy, so at the moment he is unable to access the funds.
Greene also claims that BlockFi’s founders, Zac Prince and Flori Marquez, misrepresented the offerings as being comparable to federally insured bank products, which led him to purchase the “unregistered securities.”
On February 14, the Securities and Exchange Commission (SEC) accused BlockFi of “failing to register the offers and sales of its retail crypto lending product.” However, according to the filing, the exchange “admitted its [interest] accounts were unregistered securities” during the proceedings that led to a $50 million settlement on February 15.
Through its custodial services, Tyler Winkevoss’ Gemini previously held custody over BlockFi clients’ crypto holdings and is accused of misrepresenting how accessible these funds were to customers.
“Gemini acquiesced in the materially false and misleading statements regarding the status, safety, accessibility, and risk of loss of Plaintiff’s and class members’ assets at Gemini.” For the purpose of marketing the BIAs (BlockFi interest accounts), Gemini provided BlockFi with information that was materially false and misleading.
Gemini is not mentioned in the other allegations, but it is said to have broken the exchange act.
Greene is suing for damages for each of the alleged counts, which include “treble damages” for violating the Consumer Fraud Act, reimbursement of his legal fees, a full refund of all funds acquired by the defendants and accrued interest, and a judgment preventing further consumer fraud acts.
Any BlockFi stockholders who purchased their unregistered BlockFi Interest Accounts between March 4, 2019 and November 10, 2022 are included in the class action. The defendants will be served with a summons, and they will be required to respond to the complaint within 21 days or pay the entire amount demanded by Greene.
