New York Attorney General Sues Gemini, Genesis, and DCG for Alleged Fraud
New York Attorney General Letitia James has filed a lawsuit against cryptocurrency firms Gemini, Genesis, and Digital Currency Group (DCG) for allegedly defrauding investors through the Gemini Earn investment program. The lawsuit claims that the companies defrauded over 23,000 investors, including 29,000 New York citizens, of more than $1 billion.
Allegations of Deception and Concealment
The lawsuit alleges that Gemini misled investors about the risks associated with its Gemini Earn investment program. While the company claimed it was a low-risk investment, investigations uncovered that Genesis’ financials were actually risky. Furthermore, Gemini failed to disclose important information to investors, such as the fact that Genesis’ loans were undersecured and highly concentrated with one entity.
Charges Against Genesis and DCG
In addition to Gemini, the lawsuit also charges Genesis, its former CEO Soichiro Moro, parent company DCG, and its CEO Barry Silbert with defrauding investors by attempting to conceal losses of more than $1.1 billion.
Seeking Restitution and Banning Operations
The New York attorney general’s office seeks to ban Gemini, Genesis, and DCG from operating in the financial investment industry in New York. They also aim to obtain restitution for investors and recover the “ill-gotten gains.”
Fraudulent Actions Affecting Middle-Class Investors
The lawsuit highlights the losses suffered by “middle-class investors” who were deceived by false promises of safety and growth through investing in Gemini Earn. Attorney General James criticizes Gemini for hiding investment risks and lying about their losses. She also takes aim at the broader cryptocurrency industry, emphasizing the harm caused by bad actors in the under-regulated sector.
Previous Lawsuit and SEC Charges
In January 2023, Genesis and Gemini faced a lawsuit from the United States Securities and Exchange Commission (SEC) for allegedly offering unregistered securities through the Earn program.
Hot Take: New York Attorney General Cracks Down on Crypto Fraud
New York Attorney General Letitia James has taken a strong stance against alleged fraudulent activities in the cryptocurrency industry. By suing Gemini, Genesis, and DCG for defrauding investors, James aims to protect consumers and seek justice for those who have suffered financial losses. This lawsuit serves as a warning to other actors in the under-regulated crypto space that deceptive practices will not be tolerated. As regulatory scrutiny increases, it is crucial for companies to prioritize transparency and investor protection to maintain trust in the industry.
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