Gemini faces class-action lawsuit in New York over 2025 IPO

Winklevoss twins and Gemini’s bet on the crypto market has gone wrong. According to incoming reports, Gemini has been hit with a class-action lawsuit in New York tied to its 2025 IPO. The company has been accused of misleading investors about its business strategy before and after its initial public offering last year.

According to the court filing, “The Offering Documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation.”

Gemini sued for lying to investors

The complaint, filed in the U.S. District Court for the Southern District of New York, accuses not only Gemini but also executives, including Tyler and Cameron Winklevoss.

The lawsuit follows the firm’s stock dip amid a post-IPO pivot. The timeline? On February 5, 2026, Gemini filed a Regulation FD disclosure on Form 8-K with the SEC.

The Winklevoss brothers announced a corporate pivot to “Gemini 2.0.” They listed three dramatic changes to Gemini’s operations: One, Gemini’s prediction market would be “more front and center in our experience.” Two,  Gemini would reduce its workforce by 25%. Three: Gemini would exit the United Kingdom, the European Union, and the Australian markets. 

“On this news, Gemini’s Class A common stock price fell $0.64 per share, or 8.72%, to close at $6.70 per share per share on February 5, 2026,” the class action lawsuit states.

Gemini reported an increase of 39% in Q4 revenue to $60.3 million compared to the previous year. The revenue increase exceeded the analyst’s estimate of $51.7 million. 

Gemini economics are in trouble

After these disclosures, Evercore ISI lowered its rating on the Company’s stock from outperform to in line and reduced its price target by 50%, lowering it from $15.00 to $10.00, commenting: “[o]ver time, it could prove to be ‘addition by subtraction’, but investors are more interested in growth given the early stage that the company and sector are both in”.

In addition, Truist Securities, “Truist,” downgraded Gemini’s common stock from buy to hold and cut its price target by 46% from $13.00 to $7.00, specifically due to “the Company’s drastic reduction in headcount and its sudden exit from international markets. The latter disclosure could result in more investors becoming concerned about Gemini’s solvency.” 

Subsequently, Needham & Co. cut its price target by 57% from $23.00 to $10.00, stating that Gemini’s “announcement on February 17, 2026, represented a major leadership restructuring and negatively impacted expenses.” 

Lastly, Rosenblatt cut its price target by 55% from $26.00 to $11.50, stating that “just after what at the time felt like a successful IPO, Gemini is now in full restructuring mode, first with significant expense cuts earlier this month and now major management changes with the departure of its COO, CFO, and Chief Legal Officer.”

As reported by Cryptopolitan, the COO position will remain vacant, with its duties being carried out by Cameron Winklevoss. 

With that, Gemini has violated: 

 1. Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against the exchange act defendants.

2. Section 20(a) of the Exchange Act against the Exchange Act individual

defendants.

3. Section 11 of the Securities Act against the individual defendants.

4.  Section 15 of the Securities Act against the individual defendants.

The plaintiff demands a trial by the jury.

IPO markets tumble

Under POTUS Trump, crypto markets hit a new ATH last year. But now, crypto markets are under pressure with Bitcoin trading below $70,000. This comes amid factors such as a hawkish Federal Reserve stance that has kept interest rates steady, broader stock market declines, and risk-off sentiment. 

While 2025 saw a spate of crypto companies going public through IPOs (e.g., Circle and USDC stablecoin issuer, eToro, Bullish, Gemini, etc.), they are now facing difficulties.

Currently, Kraken, which confidentially filed for an IPO toward the end of last year, has now put its plans on hold. The filing came a day after Kraken was valued at $20 billion following its $800 million funding.

So far, only crypto custodian BitGo has gone public, and its stocks have dipped by 44%, attributed to a messy market.