* Shareholders allege misleading statements in IPO

documents

* Gemini shares have fallen since September IPO

* Tyler, Cameron Winklevoss tout prediction markets, path

to profit

(Adds financial results, updated stock price, Winklevoss

shareholder letter, paragraphs 8-11)

By Jonathan Stempel

NEW YORK, March 19 (Reuters) - Gemini Space Station ( GEMI )

and its billionaire founders Cameron and Tyler

Winklevoss were sued by shareholders who said they were

defrauded about the cryptocurrency exchange's business

prospects, and suffered losses as a strategy shift, job cuts and

executive departures caused the stock price to fall.

In a proposed class action filed on Wednesday night in

Manhattan federal court, shareholders said Gemini made false and

misleading statements in marketing documents for its September

11, 2025 initial public offering by overstating the viability of

its crypto platform and its ability to grow internationally.

They also said the New York-based company did not disclose

it was poised for an "abrupt corporate pivot" to focus on

prediction markets, where users wager on the likelihood of

future events.

Shareholders said Gemini's problems surfaced in February

when the company said it would cut about 25% of its workforce

and wind down European Union, UK and Australian operations;

announced it was "parting ways" with its chief operating

officer, chief financial officer and chief legal officer; and

projected a potential $602 million net loss for 2025.

Gemini shares fell after those announcements to below $7,

more than 75% below the $28 IPO price.

Shareholders said Gemini and the Winklevosses intended to

and did "deceive the investing public." The complaint seeks

damages for shareholders between September 12, 2025 and February

17, 2026.

Gemini did not respond on Thursday to requests for comment.

After markets closed, Gemini reported a full-year net loss

of $582.8 million, or $258 million before interest, taxes,

depreciation, amortization and other adjustments.

In an accompanying shareholder letter, the Winklevosses said

prediction markets "will be as big or bigger than today's

capital markets," and focusing on the United States will reduce

expenses and "meaningfully accelerate our path to

profitability." They also said artificial intelligence was a

factor in the job cuts.

Tyler Winklevoss is Gemini's chief executive, and Cameron

Winklevoss is president. The identical twins are each worth $2.7

billion, according to Forbes magazine.

Gemini shares closed up 5 cents at $6.01 on Thursday. They

rose 11% after market hours to $6.67.