New York Attorney General Sues Crypto Firms for Fraud
New York Attorney General Letitia James has filed a lawsuit against cryptocurrency firms Genesis Global and Digital Currency Group (DCG), as well as Gemini, accusing them of defrauding investors of over $1 billion.
Gemini’s “Low-Risk Investment” Program Under Scrutiny
In the heart of the lawsuit lies a program called “Gemini Earn” that allowed customers to lend cryptocurrency assets, such as bitcoin, to Genesis. The Attorney General alleges that Gemini presented the program as a “low-risk investment,” despite internal analyses showing that Genesis was financially precarious.
This lawsuit highlights the ongoing challenges faced by the crypto industry, following the bankruptcy of FTX exchange last year, which resulted in an industry-wide meltdown.
Tensions Between Genesis and Gemini Escalate
Genesis, which filed for bankruptcy in January, has been in conflict with Gemini, its largest creditor, multiple times in recent months. According to James, Gemini was aware that Genesis’ loans were undersecured and highly concentrated with Alameda, a crypto hedge fund that ultimately collapsed. However, this information was not disclosed to investors participating in the Gemini Earn program.
Allegations of Concealing Losses
Furthermore, Genesis and its former CEO Soichiro Moro, along with DCG and its chief Barry Silbert, have been charged with attempting to conceal losses totaling more than $1.1 billion.
DCG and Gemini have not yet responded to Reuters’ request for comment on the matter.
In conclusion, the New York Attorney General’s lawsuit against Genesis Global, Digital Currency Group, and Gemini sheds light on alleged fraudulent practices within the crypto industry. These claims emphasize the need for stronger regulations and transparency to protect investors in this evolving market.
