NY AG Files $1B Suit Against Cryptocurrency Companies for Alleged Fraud

Published:

On Thursday, New York Attorney General Letitia James filed a lawsuit against three major players in the digital asset industry accused of lying to investors and concealing losses in a $1 billion fraud scheme. The targets of the suit include Gemini Trust, the exchange run by the twin brothers Tyler and Cameron Winklevoss; the lender Genesis Capital; and Digital Currency Group, the parent company of Genesis.

According to the lawsuit, internal documents at Gemini showed that the company’s risk analysis teams deemed Genesis very risky, yet they didn’t share this information with investors. This left at least 29,000 New Yorkers and hundreds of thousands of others across the country in the dark about the dangers to their assets.

The lawsuit also accuses Genesis and Digital Currency Group of trying to conceal Genesis’ losses from Gemini Earn investors and the public by entering into a $1.1 billion, 10-year promissory note.

Gemini responded by applauding and condemning the lawsuit on the social media platform X. Gemini said that the filing confirms what they have been saying all along, but disagreed with the decision to name Gemini in the suit.

A spokesman for Digital Currency Group said that they would fight the claims, and Barry Silbert, the company’s CEO, said he was “shocked by the baseless allegations.” Genesis did not immediately respond to a request for comment.

This is not the companies’ first lawsuit stemming from Gemini Earn. The Securities and Exchange Commission charged Gemini and Genesis with offering unregistered securities in January, and multiple proposed class-action lawsuits from investors have been filed.

Ms. James is seeking to bar Gemini, Genesis and Digital Currency Group from operating in the financial investment industry, restitution for investor losses, and proposed legislation that would require public audits of crypto exchanges, limit conflicts of interest, build safeguards to prevent fraud, and compensate victims.

Related articles

Recent articles