New York Attorney General Expands Lawsuit Against Cryptocurrency Firms Gemini, Genesis, and DCG to $3 Billion
Cryptocurrency firms Gemini, Genesis Global Capital, and Digital Currency Group (DCG) are facing an expanded lawsuit from New York Attorney General Letitia James. The lawsuit, originally filed in October for $1.1 billion, has now tripled in size to a staggering $3 billion. The attorney general accuses the firms of defrauding investors and alleges that more victims have come forward since the initial filing.
Gemini, founded by billionaire twins Cameron and Tyler Winklevoss, is at the center of the controversy. The Winklevoss twins gained fame for their legal battle against Mark Zuckerberg over the origins of Facebook. The lawsuit claims that Gemini “lied to investors” by assuring them that their investments were safe in the Gemini Earn program, which was operated in collaboration with Genesis.
However, it is alleged that Genesis’ loans were actually risky and “highly concentrated” with FTX founder Sam Bankman-Fried’s crypto hedge fund Alameda Research. Gemini supposedly knew about this but failed to disclose it to investors. As more victims came forward, it became evident that the fraud extended beyond the partnership between DCG and Genesis, ensnaring investors who directly sent money to Genesis and were falsely assured of its safety.
Former Genesis CEO Soichiro Moro and DCG founder and CEO Barry Silbert are also named in the lawsuit. New York Attorney General Letitia James emphasized the need for stronger cryptocurrency regulations to protect investors, stating that the illegal scheme and resulting financial losses highlight this necessity.
The additional investors who have joined the lawsuit include retail customers, such as a chiropractor and a stay-at-home father, each of whom invested $2 million of bitcoin with Genesis. DCG responded to the lawsuit, calling it “baseless” and expressing confidence in winning the case.
Genesis, which filed for bankruptcy in January 2023, has reached a settlement with the attorney general’s office. The settlement requires Genesis to pay the fraud claims and fully repay customers through the Chapter 11 bankruptcy process, pending approval from a bankruptcy judge.
Both Genesis and Gemini have faced legal challenges beyond this lawsuit. They were sued by the U.S. Securities and Exchange Commission (SEC) for bypassing disclosure requirements meant to protect Gemini Earn customers. Genesis recently agreed to pay a $21 million fine to the SEC, contingent on repaying customers first. Additionally, Gemini has sued DCG over the failure of their crypto lending partnership.
The outcome of this lawsuit will have significant implications for the cryptocurrency industry and may influence future regulations. As the case unfolds, investors and industry experts will closely monitor the developments and their potential impact on the market.
Disclaimer: The information provided in this article is based on publicly available sources and does not constitute financial or investment advice. Readers are encouraged to do their own research and consult with professionals before making any investment decisions.