NY Attorney Alleges Gemini and Genesis Defrauded Investors, Pursues $3 Billion in Compensation
New York Attorney General Letitia James has taken a bold step in her lawsuit against cryptocurrency firms Gemini, Genesis Global Capital, and Digital Currency Group (DCG), seeking a staggering $3 billion in damages. The amended complaint, filed last Friday, triples the initial fraud claims made by James.
The lawsuit centers around Gemini, a cryptocurrency exchange founded by the Winklevoss twins, and its collaboration with Genesis on a program called Gemini Earn. It alleges that Gemini misled investors by assuring them that their funds were secure, when in fact they were risky loans tied to SBF’s hedge fund.
According to the lawsuit, Gemini was aware of the risks involved but chose not to disclose them to investors. As more victims came forward, the losses resulting from the alleged fraud grew to over $2 billion, affecting more than 230,000 investors and resulting in total cumulative losses exceeding $3 billion.
In addition to Gemini, the lawsuit also names former Genesis CEO Soichiro Moro and DCG founder and CEO Barry Silbert. DCG has dismissed the lawsuit as baseless and is confident in its ability to prevail in court. Genesis, on the other hand, has filed for bankruptcy and has reached a settlement with the Attorney General’s office, pending approval from a bankruptcy judge.
Both Genesis and Gemini are also facing legal challenges from the U.S. Securities and Exchange Commission (SEC) for allegedly sidestepping disclosure requirements meant to protect Gemini Earn customers. While Genesis has agreed to a $21 million fine with the SEC, Gemini is engaged in a legal battle with DCG over issues related to their crypto-lending partnership.
The New York Attorney General underscores the urgent need for stronger cryptocurrency regulations to safeguard the interests of investors. This demand for increased safeguards cannot be ignored any longer.