Gemini, Other Leading Crypto Firms Sued by New York AG for Allegedly $1B Scam

Gemini, Other Leading Crypto Firms Sued by New York AG for Allegedly $1B Scam
  • The New York Attorney General sues Gemini, Genesis and DCG for allegedly defrauding investors and seeking to ban them from the financial investment industry in New York.
  • The lawsuit filed states that Genesis borrowed funds from Gemini, which were then distributed to other parties like Three Arrows Capital and Alameda Research, resulting in a breach of $1.1 billion.
  • The lawsuit also charges former Genesis CEO Soichiro Moro and DCG CEO Barry Silbert with defrauding investors by concealing substantial losses.

Gemini, Genesis and DCG are currently enmeshed in an escalating legal battle with the New York Attorney General. The companies experienced a major hit as a result of the plunge in the crypto market last year.

New York AG Sues Gemini, Genesis and DCG Over Alleged Fraud

The New York Attorney General, Letitia James, filed a lawsuit on Thursday against three cryptocurrency companies, Gemini, Genesis and Digital Currency Group (DCG) for alleged $1 billion fraud from over 230,000 investors, which included at least 29,000 New York residents. The AG is also seeking to further ban these crypto companies from the financial investment industry in New York.

In the lawsuit, it was disclosed that Genesis borrowed some funds from Gemini as a part of its Earn program. This was later disbursed as a loan to counterparties and trading firms like Three Arrows Capital and Alameda Research, which subsequently went bankrupt, leaving Genesis with an over $1.1 billion deficit.
Aside from the lawsuit filed against Gemini and Genesis, the Attorney General has also previously clamped down on other crypto firms like KuCoin, CoinEx and Celsius founder Alex Mashinsky. She described the lawsuit as necessary action to keep investors safe from unruly crypto firms.

This case clearly follows the suit filed against Alex Mashinsky and FTX founder Sam Bankman-Fried by the Federal Department of Justice. Both men have since pleaded not guilty.

The AG, Letitia James, accused Gemini of being complicit with Genesis and knew that the firm's loans were undersecured, but they chose to focus on Bankman-Fried's trading firm, Alameda Research, while keeping all information secret from investors. She also charged Soichiro Moro, who was the former Chief Executive Officer of Genesis, and Barry Silbert, DCG CEO, with fraudulent activities and concealing the truth from investors.

The suit also disclosed that the facts provided by Genesis and DCG after the bankruptcy of Three Arrows Capital were misleading and omitted real facts. The suit further accused Gemini and Genesis of not obtaining government licenses and not being registered under New York securities laws.
The AG concluded by stating that,
"My office will continue our efforts to stop deceptive cryptocurrency companies and push for stronger regulations to protect all investors."

DCG and Gemini Respond to Allegations and Lawsuit by New York's AG

DCG has since responded to the lawsuit filed by New York's AG and released a statement through its spokesperson stating that the company has been cooperating with the AG's probe over the past few months.

On his part, DCG CEO revealed that he was shocked by the AG's accusations which he termed baseless, adding that he and his firm have always worked with principles and integrity.

Gemini responded with a statement on its official X platform (formerly Twitter) that they do not accept the allegations made by the AG.

Concluding Thought

The New York Attorney General has vowed to use her office to protect investors of their hard earned money and this can be seen in her lawsuit charges against top leading crypto firms in New York. However, these crypto companies have since debunked the allegations clearly stating that they are false.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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