Gemini Battles Consumer Group Over User Agreement, Argues Law Underlying Claims May Not Cover Crypto

On Wednesday, August 14, 2024, the Winklevoss-led crypto exchange Gemini removed a consumer protection lawsuit against it to federal court, claiming the suit hinges on questions of whether a key federal statute applies to cryptocurrencies.

A consumer advocacy organization, the National Associates of Consumer Advocates Inc. (NACA), filed a suit in June alleging that Gemini’s user agreement violates the federal Electronic Funds Transfer Act (EFTA) and Washington D.C.’s consumer protection laws. However, Gemini argues the initial question is whether the EFTA – which establishes protections for unauthorized electronic fund transfers – even applies to cryptocurrencies.

Gemini pointed out that the applicable court has yet to rule on this issue in its notice removing the case to the U.S. District Court for the District of Columbia. No federal appellate court has decided whether cryptocurrencies fall under the EFTA either. The legal question was previously raised but not resolved in two settled cases against crypto firm Uphold in the Southern District of New York.

The NACA complaint specifically argued that Gemini’s user agreement improperly shifts liability for unauthorized transactions onto consumers. It also claimed the agreement severely limits dispute timeframes, denies provisionally credited funds access, and waives numerous statutory protections. However, Gemini maintains the threshold issue is the applicability of the EFTA in the context of digital assets, which involves “trillions of dollars” and implications beyond any single case.

Please contact BlockTribune for access to a copy of this filing.