New York Attorney General Sues Digital Currency Group and Gemini Trust Co.
New York Attorney General Letitia James has filed an amended lawsuit against Digital Currency Group (DCG) and its affiliate Gemini Trust Co., seeking restitution of $3 billion. This updated legal action comes after Genesis Global settled with New York over allegations of defrauding customers through the terminated Gemini Earn program. The revised lawsuit now includes claims from over 230,000 investors, indicating a larger scale of fraud than initially believed. The original lawsuit sought $1.1 billion but was increased due to new investor testimonies regarding misleading investment safety assurances.
The Lawsuit Details
The lawsuit does not introduce new allegations against Gemini but focuses on the alleged failure of Gemini and DCG’s unit, Genesis Global Capital, to inform investors about the risks associated with a crypto lending program launched in 2021. The downfall of the program coincided with major bankruptcies in the crypto industry, including FTX’s collapse led by Sam Bankman-Fried.
About the Gemini Earn Program
The Gemini Earn program, a collaboration between Gemini and Genesis, offered customers up to 8% interest for lending out their crypto assets. However, the lawsuit claims that significant investments were made in unsafe ventures such as Three Arrows Capital and Babel Finance, resulting in substantial financial losses for Genesis. Additionally, the lawsuit alleges that Gemini did not fully disclose the risks associated with their loans, including substantial loans made to Alameda Research owned by Sam Bankman-Fried. This led to accusations that Genesis and DCG attempted to hide their financial troubles from investors.
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