New York’s attorney general has filed a lawsuit against cryptocurrency firms Gemini, Genesis and Digital Currency Group (DCG) for allegedly defrauding investors through the Gemini Earn investment program.
An official statement from the office of Attorney General Letitia James outlines the basis of the charges, claiming that the companies defrauded more than 23,000 investors, including 29,000 New York citizens, of more than $1 billion.
An investigation carried out by James’ office claims that Gemini lied to investors about its Gemini Earn investment program, which it ran in partnership with Genesis. It claims that, while Gemini had assured investors that the program was a low-risk investment, investigations reveal that Genesis’ financials “were risky”:
“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.”
The lawsuit also charges Genesis, as well as its former CEO Soichiro Moro, parent company DCG and its CEO, Barry Silbert, with defrauding investors by attempting to conceal more than $1.1 billion in losses.
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The lawsuit looks to ban Gemini, Genesis and DCG from operating in the financial investment industry in New York, as well as seek restitution for investment and the return of “ill-gotten gains.”
A statement from the New York attorney general highlighted the losses suffered by “middle-class investors”:
“Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn.”
James added that Gemini hid the risks of investing with Genesis, while the company lied to the public about its losses. She also took aim at the wider cryptocurrency industry, describing the fraud as “another example of bad actors causing harm throughout the under-regulated cryptocurrency industry.”
Genesis and Gemini had previously been hit with a lawsuit from the United States Securities and Exchange Commission in January 2023 for allegedly offering unregistered securities through the Earn program.
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