Investor Files Complaint Against Gemini, Founders of BlockFi Over Frozen Funds

On February 28, Trey Greene, an investor with approximately $2 million worth of funds frozen in the bankrupt cryptocurrency lender BlockFi, filed a class action complaint against its founders, two directors, and crypto exchange Gemini in the U.S. District Court for the District of New Jersey. However, Greene alleged the defendants had violated consumer fraud and exchange acts, breached fiduciary duties, and offered and sold unregistered securities.

Greene claims to have invested over $1.5 million in interest accounts, which are alleged to be unregistered securities that yielded capital gains and earned interest amounting to more than $400,000. Unfortunately, he can no longer withdraw the funds after BlockFi froze all withdrawals on Nov. 10 — coinciding with FTX’s filing for bankruptcy.

The Securities and Exchange Commission (SEC) charged BlockFi with failing to register the offers and sales of its retail crypto lending product on February 14. In response, Greene asserts that he was misled by BlockFi founders Zac Prince and Flori Marquez into buying unregistered securities that they presented as being comparable to federally-insured bank products. During the proceedings, BlockFi admitted that their interest accounts were unregistered securities, leading to a settlement of $50 million on February 15.

Read the source article at cryptopolitan.com