New York AG sues Gemini, Genesis for $1 billion fraud

• The New York Attorney General Letitia James filed the lawsuit against Gemini, Genesis and DCG on Thursday.
• It’s alleged the crypto firms lied to investors and concealed losses of over $1 billion.

New York Attorney General Letitia James has sued Gemini, Genesis Global Capital and Digital Currency Group over allegations that the crypto companies defrauded over 230,000 investors, 29,000 of them from New York.

Crypto companies lied to investors

In the lawsuit the AG filed on Thursday, the companies perpetrated the more than $1.1 billion fraud scheme by concealing losses and repeatedly lying to investors. Gemini Earn customers were greatly impacted when Genesis paused withdrawals in December last year.

I’m suing cryptocurrency companies @Gemini, @GenesisTrading, and @DCGco for defrauding 230,000 investors out of more than $1 billion. 
 
This is yet another example of the harms of an unregulated crypto industry.https://t.co/ysLVm8nujr

— NY AG James (@NewYorkStateAG) October 19, 2023

According to the top New York prosecutor, despite Gemini’s own analyses showing that Genesis’ loans were not only undersecured but also “highly concentrated with one entity, Sam Bankman-Fried’s Alameda,” the company did not warn its customers about it. Rather, the crypto exchange continually assured customers that the earn program constituted a low-risk investment.

Withholding the information from investors extended to Genesis, and its former CEO Soichiro Moro. Genesis parent company, recently embroiled in a tussle over customer funds with Gemini, has is also looped into the accusation. The lawsuit also charges DCG CEO Barry Silbert.

“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,” James said. She added:

“My office will continue our efforts to stop deceptive cryptocurrency companies and to push for stronger regulations to protect all investors.”

The lawsuit against the three companies is the New York Ag’s latest crackdown on crypto firms. Some of the recent actions have been against crypto platform CoinEx, Coin Café, KuCoin and Nexo.