A proposed class-action lawsuit filed in the U.S. District Court for the Southern District of New York alleges that cryptocurrency exchange Gemini, along with co-founders Cameron and Tyler Winklevoss, misled investors before and after its September 2025 initial public offering. The complaint claims the company's offering documents overstated the strength and growth prospects of its core exchange business while omitting a pre-planned, fundamental strategic pivot.
The suit centers on the claim that Gemini failed to disclose its imminent shift away from cryptocurrency trading toward a prediction-market model, later branded "Gemini 2.0." Plaintiffs argue this undisclosed change in strategy led directly to a series of damaging post-IPO events that cratered the stock price. Gemini's IPO, which occurred on September 12, 2025, involved the issuance of 15,178,572 Class A shares at $28 each, raising approximately $398.4 million in gross proceeds for the company.
The alleged fallout began to materialize in February 2026. On February 5, Gemini announced that prediction markets would become a central focus, revealed plans to cut 25% of its workforce, and stated it would exit operations in the United Kingdom, the European Union, and Australia. Following this disclosure, the company's stock fell 8.72% to close at $6.70. Further executive departures and a warning of a potential $602 million net loss for 2025, disclosed on February 17, pushed shares below $7.
The lawsuit seeks damages for shareholders who purchased stock between September 12, 2025, and February 17, 2026, alleging the defendants intended to deceive the investing public. Gemini has not publicly responded to the litigation. In its recent financial reporting, the company confirmed a full-year net loss of $582.8 million for 2025. Its stock closed at $6.01 on the Thursday before the suit was reported, later rising 11% in after-hours trading to $6.67.
The case arrives amid heightened regulatory scrutiny of crypto firms and could set a precedent for disclosure standards required of cryptocurrency companies during public offerings.
