- Gemini, Genesis, and DCG are the target of a new lawsuit.
- The sweeping lawsuit was filed by New York’s AG.
- All three firms are accused of defrauding investors.
Alarm bells for a crypto crackdown continue to ring in the U.S. as three firms find themselves in the crosshairs of a sweeping lawsuit.
Today, October 19, New York Attorney General (AG) Letitia James announced a wide-ranging lawsuit against three cryptocurrency firms, namely Genesis Global, its parent company Digital Currency Group (DCG) and Gemini, for allegedly defrauding investors of over $1 billion.
A Sweeping Lawsuit
In an official press release, the Attorney General’s office asserted that its investigations found Gemini in cahoots with Genesis culpable of “lying to investors” about a program the two companies ran together, Gemini Earn.
Per the lawsuit, even with the prior knowledge of Genesis’s financial risks, such as its loans being undersecured and, at some point, concentrated in Sam Bankman-Fried’s Alameda, as revealed by internal analyses, Gemini chose to hide this information from investors.
Further, the lawsuit alleges that former Gemini CEO Soichiro Moro, DCG, and the company’s CEO Barry Silbert defrauded investors and the public by concealing over $1.1 billion in losses, which investors bore.
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,” AG James stated.
According to the AG, the alleged deceptions and misrepresentation caused investors to lose “millions of dollars, including life savings.
The AG accuses the three companies of defrauding 230,000 investors, including at least 29,000 residents of New York.
In particular, a retired 73-year-old grandmother residing in New York reportedly lost over $199,000 in the Gemini Earn investment program because she “believed” the company’s marketing statements that the investment vehicle was a “safe and secure” choice for her life savings.
Another 56-year-old New Yorker lost about $20,500 in life savings, noting that he chose Gemini Earn after his online research, backed by “falsified” marketing statements, positioned the program as “more secure” than other interest-bearing crypto investments.
Read why the CFTC recently pursued DeFi platforms in the U.S.:
U.S. Crypto Crackdown: CFTC Pursues DeFi Platforms
Read why the CFTC’s position on crypto is at odds with that of the SEC:
CFTC Opposes SEC’s Crypto Position: Calls ETH and Stablecoins Commodities