New York AG Sues DCG, Genesis and Gemini for Massive Investor Fraud

New York Attorney General Letitia James alleges these companies defrauded more than 230,000 investors causing losses of over $1B.

By: Camila Russo Loading...

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New York's Attorney General Letitia James is launching an aggressive lawsuit against crypto titans Gemini Trust Company, Genesis Global Capital and its affiliates, and Digital Currency Group, according to a statement published Thursday.

The lawsuit alleges the firms perpetrated fraud that resulted in losses exceeding $1B for over 230,000 investors, including at least 29,000 New Yorkers.

The legal proceedings result from an investigation by the Office of Attorney General (OAG). The office alleges Gemini repeatedly misled investors about the Gemini Earn program it ran in partnership with Genesis, portraying it as a low-risk opportunity, even though Gemini's internal analysis showed Genesis' financial situation was precarious.

"The lawsuit alleges that Gemini knew Genesis’ loans were undersecured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors," according to NYAG's release.

Concealment of Major Losses

Aside from these allegations, Genesis and DCG, including Genesis' former CEO Soichiro Moro and DCG's CEO Barry Silbert, are accused of concealing around $1.1B in losses. These deceptions resulted in thousands of investors losing significant sums.

Attorney General James is seeking a permanent ban on Gemini, Genesis, DCG, and associated executives from any business dealings related to the purchase and sale of securities and commodities within or from New York. She is also demanding restitution for all defrauded investors and the disgorgement of all ill-acquired gains.

Impact on Investors

The NYAG makes an effort to shed light into the impact the losses had on individuals. The release claims a retired 73-year-old grandmother lost her entire life savings of over $199,000 after investing the funds in Gemini Earn.

The lawsuit brought by the Attorney General is part of a wider effort to regulate the cryptocurrency industry. Prior actions include recoveries from CoinEx, Coin Cafe, and Nexo for failures to register and illegal operations respectively.

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