New York Attorney General Sues Gemini, Genesis, and DCG for “Defrauding Investors”

Bits Logics Team . 19th Oct 2023
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  • New York Attorney General Letitia James filed a lawsuit against Gemini, Genesis, and Digital Currency Group.
  • Reportedly, these crypto companies defrauded more than 230,000 investors, including over 29,000 New Yorkers.
  • The Office of the Attorney General (OAG) investigation revealed that Gemini misled investors through its Gemini Earn investment program.

New York Attorney General Letitia James filed a lawsuit against cryptocurrency companies Gemini Trust Company (Gemini), Genesis Global Capital, LLC, and its affiliates (Genesis), as well as Digital Currency Group, Inc. (DCG), alleging a massive fraud scheme. Based on the press release, it was reported that these crypto companies defrauded more than 230,000 investors, including over 29,000 New Yorkers, resulting in losses exceeding $1 billion.

The Office of the Attorney General (OAG) investigation revealed that Gemini misled investors through its Gemini Earn investment program, which was conducted in collaboration with Genesis. Despite reassuring investors that the Gemini Earn program was low-risk, internal investigations done by the OAG found that Gemini’s assessments of Genesis’s financials indicated substantial risks.

Reportedly, Gemini allegedly concealed critical information from investors, including the fact that Genesis’s loans were “undersecured and at one point highly concentrated” with one entity, Sam Bankman-Fried’s Alameda.

This legal action also implicates Genesis, its former CEO Soichiro Moro, DCG, and DCG’s CEO Barry Silbert for attempting to conceal losses exceeding $1.1 billion. Investors suffered significant financial losses, and in some cases, lost their life savings due to these deceptive practices. The New York Attorney General seeks to ban Gemini, Genesis, and DCG from participating in New York’s financial investment industry and aims to secure restitution for affected investors while recovering ill-gotten gains.

Furthermore, the New York Attorney General condemned the actions of these cryptocurrency companies, stating:

“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result.”

“Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn,” New York Attorney General Letitia James expressed. “Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses. This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry.”

This lawsuit aims to permanently halt Gemini, Genesis, DCG, and their executives from engaging in any further activities related to the purchase and sale of securities and commodities within or from New York. Moreover, the New York Attorney General also seeks restitution for all defrauded investors and the disgorgement of all wrongfully obtained profits.

Finally, Letitia James also encouraged individuals who were impacted by “deceptive conduct” in virtual asset markets to report such incidents to the OAG. She also calls on cryptocurrency industry employees who may have witnessed misconduct or fraud to file online whistleblower complaints anonymously through her office.