The Winklevoss twins' bet on Gemini in the crypto market appears to be encountering turbulence. According to recent reports, Gemini is facing a class-action lawsuit in New York related to its planned Initial Public Offering (IPO) in 2025. The company is accused of misleading investors about its business strategy both before and after its initial public offering last year.
According to court documents, "the Registration Statement was negligently prepared, so as to contain untrue statements of material fact or omit to state other facts necessary to make the statements therein not misleading, and was not prepared in compliance with the applicable rules and regulations."
Gemini Sued for Misrepresentation
The lawsuit was filed following a significant drop in the company's stock price after a strategic shift post-IPO. On February 5, 2026, Gemini filed a Form 8-K disclosure with the U.S. Securities and Exchange Commission (SEC) regarding information about the company.
"Following the news, Gemini's Class A common stock price fell $0.64 per share, or 8.72%, to close at $6.70 per share on February 5, 2026," the class-action lawsuit states.
Gemini's fourth-quarter report indicated that revenue increased by 39% year-over-year to $60.3 million, surpassing analyst expectations of $51.7 million.
Gemini's Financial Health in Question
Following these disclosures, Evercore ISI downgraded the company's stock rating from 'Outperform' to 'In-Line' and slashed its price target by 50%, from $15.00 to $10.00, commenting, "This may prove to be 'more with less' over time, but investors are more focused on the early growth of the company and the industry."
Additionally, Truist Securities downgraded Gemini's common stock rating from 'Buy' to 'Hold' and lowered its price target by 46%, from $13.00 to $7.00, primarily due to "significant layoffs and the sudden exit from international markets. This disclosure may lead more investors to worry about Gemini's ability to service its debt."
Subsequently, Needham & Co. reduced its price target by 57%, from $23.00 to $10.00, noting that Gemini's February 17, 2026, announcement represented a significant management structure adjustment and negatively impacted expenses.
Finally, Rosenblatt lowered its price target by 55%, from $26.00 to $11.50, stating, "Following what appeared to be a successful IPO, Gemini is now in a full restructuring phase, beginning with significant layoffs earlier this month, followed by the departure of its COO, CFO, and Chief Legal Officer."
Consequently, Gemini is alleged to have violated:
- Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder.
- Section 20(a) of the Securities Exchange Act for individual defendants.
- Section 11 of the Securities Act for individual defendants.
- Section 15 of the Securities Act.