New York's Attorney General, Letitia James, has initiated a legal action against cryptocurrency companies Gemini, Genesis, and Digital Currency Group (DCG), alleging fraudulent activities related to the Gemini Earn investment program. According to a statement from the Attorney General's office, the lawsuit alleges that these firms collectively defrauded over 23.000 investors, including approximately 29.000 residents of New York, of more than $1 billion.
The lawsuit is based on findings from an investigation that uncovered deceptive practices within the Gemini Earn program, which was conducted in partnership with Genesis. While Gemini represented the investment scheme as low-risk, the investigation revealed that Genesis was facing substantial financial risks. Specifically, the lawsuit contends that Gemini knew about the undersecured nature of Genesis' loans and their high concentration within Sam Bankman-Fried's Alameda entity. However, this information was allegedly concealed from investors.
The legal action also targets Genesis, its former CEO Soichiro Moro, parent company DCG, and its CEO Barry Silbert, accusing them of attempting to conceal over $1.1 billion in losses and engaging in fraudulent activities to the detriment of investors. The lawsuit seeks to prevent Gemini, Genesis, and DCG from participating in New York's financial investment industry. Additionally, it aims to secure damages for affected investors and the return of any unlawfully acquired gains.
The New York Attorney General's statement emphasizes the losses experienced by middle-class investors who were misled by false assurances of safety and growth when they invested in Gemini Earn. Attorney General Letitia James criticized the cryptocurrency industry as a whole, stating that this fraud is another example of unscrupulous actors causing harm within the under-regulated cryptocurrency sector. Notably, both Genesis and Gemini had previously faced a lawsuit from the U.S. Securities and Exchange Commission (SEC) in January 2023. which alleged that they offered unregistered securities through the Gemini Earn program.
