In Lawsuit, National Consumer Advocacy Organization Alleges Violations of D.C. and Federal Consumer Protections Against Cryptocurrency Platform

July 1, 2024

For Immediate Release:

In Lawsuit, National Consumer Advocacy Organization Alleges Violations of D.C. and Federal Consumer Protections Against Cryptocurrency Platform

Washington, D.C. – The National Association of Consumer Advocates, Inc. (NACA) filed suit on June 26, 2024 against Gemini Trust Company LLC, the provider of a cryptocurrency platform boasting hundreds of thousands of active users.

The suit, brought in D.C. Superior Court, alleges that Gemini’s user agreement shifts losses due to fraud from Gemini to its customers, in violation of the District’s local consumer protection laws and the Electronic Funds Transfer Act (EFTA), a law that protects consumers from unauthorized transfers of funds.

The lawsuit is brought under D.C.’s Consumer Protection Procedures Act (CPPA), which allows public interest organizations to file a lawsuit in the District on behalf of a class of consumers to vindicate their rights. NACA is represented by Tycko & Zavareei LLP, Varnell & Warwick PA and Schlanger Law Group LLP.

NACA, a nonprofit advocacy and membership organization dedicated to representing consumer interests, asserts that Gemini’s User Agreement contains numerous provisions that violate the EFTA. These include clauses that absolve Gemini of responsibility for unauthorized access to user accounts and place the onus on consumers to monitor and secure their accounts. According to the complaint, these practices leave consumers vulnerable to scams and unauthorized transactions without recourse despite the fact that the EFTA provides broad protections against unauthorized electronic charges.

“Gemini’s User Agreement is replete with provisions that are inconsistent with the EFTA’s protections against unauthorized use, placing undue risk and liability on consumers,” said Daniel Schlanger of Schlanger Law Group LLP.

The lawsuit highlights several instances where Gemini customers have suffered significant financial losses due to unauthorized transactions, while Gemini refuses to provide relief or restore lost funds. These actions, the complaint argues, are not only unfair but also illegal under the EFTA and the CPPA.

Peter Silva of Tycko & Zavareei LLP emphasized, “The CPPA is designed to protect consumers from deceptive and unfair trade practices. By bringing this action, we aim to secure the protections that consumers are entitled to under the law and ensure that Gemini cannot continue these practices.”

Janet Varnell of Varnell & Warwick PA added, “Consumers must have confidence that their financial transactions are protected by law. This suit addresses critical gaps in Gemini’s compliance that leave consumers unprotected.”

The complaint seeks injunctive relief to prevent Gemini from enforcing the illegal provisions of its user agreement and to ensure compliance with consumer protection laws. The case addresses critical issues surrounding the burgeoning cryptocurrency industry and the rights of consumers engaging in electronic financial transactions.

“It is NACA’s longstanding mission to advocate on behalf of consumers and support their ability to enforce their rights under law,” said Ira Rheingold, NACA’s executive director. “DC’s law provides a fitting venue for us to fight for consumers’ rights despite the unfair fine print, and to seek justice for fraud victims in the obscure cryptocurrency arena.”