Crypto exchange Gemini is facing a proposed class-action lawsuit over what a complaint alleges is an “abrupt corporate pivot to a prediction-market-centric business model” after its IPO.

Gemini is facing a proposed class-action lawsuit in New York for allegedly misleading investors during and after the crypto exchange’s September initial public offering.

The lawsuit was filed on Thursday in Manhattan federal court by shareholders against Gemini, its co-founders Tyler and Cameron Winklevoss, and company executives.

Plaintiff Marc Methvin alleges that the company’s IPO documents portrayed Gemini as a growing crypto exchange focused on expanding its user base and international footprint, but that it made an “abrupt corporate pivot to a prediction-market-centric business model.”

Gemini held its IPO in September, floating its shares at $28 on the Nasdaq. The stock briefly reached $40 but has since fallen by more than 80% to trade at around $6 on Thursday. 

The plaintiffs are seeking a jury trial and damages for investors who bought shares at what the complaint describes as “artificially inflated prices” shortly after the IPO.

Prediction market pivot caused stock drop, say shareholders

According to the complaint, in November, Gemini executives publicly touted its international expansion progress, stating the company was committed to extending into “key global markets.”

The lawsuit said Gemini IPO documents described the exchange as its “core product.” However, in early February, the Winklevoss brothers announced a pivot to prediction markets called “Gemini 2.0.” 

The firm also announced that it would cut 25% of its workforce and exit the EU, UK, and Australian markets. 

Related: Gemini post-IPO shakeup sees exit of three top executives

Later that month, the company’s chief financial officer, chief operations officer, and chief legal officer all departed as the firm reported increased operating expenses of around 40%, according to the lawsuit.

The complaint claimed that as a result of these changes, the class group had seen “significant losses and damages” as Gemini’s stock price dropped to an all-time low of $5.82 by February 20.

Gemini stock has tanked since its September IPO. Source: Google Finance

Gemini reported on Thursday that its Q4 revenues rose 39% year-on-year to $60.3 million, beating analyst expectations of $51.7 million.