New York State Attorney General (AG) Letitia James is suing three large crypto firms for allegedly defrauding over 230,000 Americans.
In a new press release, AG Letitia James says that she is taking legal action against the crypto exchange Gemini, the lending firm Genesis and the investment giant Digital Currency Group (DCG) over allegations that the companies attempted to conceal $1.1 billion in losses and “repeatedly lied” to its investors.
An investigation found that Gemini lied to investors about the risks of its Gemini Earn program, which aimed to provide customers with yield on their crypto assets. Gemini partnered with Genesis to facilitate the service.
James also alleges that at one point, Genesis’ loans were “undersecured” and on one occasion concentrated within Alameda Research, the trading arm of now-bankrupt crypto exchange FTX and under control by its disgraced CEO Sam Bankman-Fried.
The lawsuit also directs charges at former Genesis CEO Soichiro Moro and DCG CEO Barry Silbert.
AG James says the lawsuit also seeks to ban all three firms from the financial investment industry of New York and requests compensation for investors’ losses and disgorgement of the companies’ “ill-gotten gains.”
Says the New York State Attorney General,
“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. 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. My office will continue our efforts to stop deceptive cryptocurrency companies and push for stronger regulations to protect all investors.”
Genesis went bankrupt early this year and owed $735 million to members of the Earn program during its collapse.
Gemini co-founder Cameron Winklevoss alleged that DCG, Silbert, other executives, and Genesis created false financial reports in order to trick their creditors and maintain the illusion that everything was in order.
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