Gemini Crypto Faces Lawsuit Over Alleged Post-IPO Strategy Shift and 80% Stock Collapse

Gemini Crypto and its founders, the Winklevoss twins, have been hit with a class-action lawsuit in Manhattan federal court alleging they misled investors during the exchange's September IPO. Shareholders claim the company raised capital on a specific growth narrative only to pivot to prediction markets and implement aggressive cost-cutting immediately after securing funds, contributing to a devastating 80% stock decline from its post-IPO high of $40 to approximately $6.

The Mechanics of the Bait-and-Switch Allegation: What the Lawsuit Claims

The lawsuit comes down to one thing: what Gemini told investors and what it actually did.

Gemini listed on the Nasdaq in September at $28. The pitch was global expansion, user growth, and a central exchange built to scale internationally. Shareholders bought in. Then the story changed fast.

By November, executives were still talking up key global markets. By February, the Winklevoss brothers scrapped the entire narrative.

They announced Gemini 2.0, a pivot toward prediction markets, alongside a 25% workforce reduction. Then came the exits. EU, UK, Australia. Every market flagged as a growth opportunity, gone.

Expectations are building for a rate cut

There’s a 37% probability the June FOMC will cut 25bps

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June is also the first Fed meeting where Powell is not acting chair pic.twitter.com/xnAO7eIaQT

The plaintiff argues this was not a reaction to market conditions. It was a planned strategy shift that made the IPO materials misleading from the start.

If internal communications contradict what was in the prospectus, that is a serious problem. Dismissing a misleading disclosure charge is hard when the paper trail works against you.

The regulatory environment does not help Gemini here either. When shareholder litigation runs on securities law, and securities law does not bend for sentiment. This is also a different fight from the Earn program settlement. That was about unregistered securities. This is about whether investors were sold a business model that was already being abandoned.

The pivot to prediction markets trades a large addressable market for a speculative niche. Gemini capped its own ceiling and the stock reflects it.