New York Attorney General Files $3 Billion Lawsuit Against Crypto Firms
New York Attorney General Letitia James has tripled the stakes in her ongoing lawsuit against cryptocurrency firms Gemini, Genesis Global Capital, and Digital Currency Group (DCG). The amended complaint filed last Friday now seeks a staggering $3 billion, three times the initial fraud claims.
Gemini’s Misleading Assurances
The heart of the matter lies with Gemini, which is accused of duping investors through a program called Gemini Earn, conducted in collaboration with Genesis. The lawsuit alleges that Gemini assured investors their funds were secure, but the reality was far from it.
The lawsuit contends that Genesis’ loans, intricately tied to FTX founder Sam Bankman-Fried’s crypto hedge fund, were far riskier than Gemini let on. Shockingly, it is claimed that Gemini was aware of this risk but chose not to disclose it to investors.
Losses are Growing
As more victims surfaced, the Attorney General asserts that false assurances regarding the safety of funds translated into additional losses totaling a staggering $2 billion. The alleged fraud has now affected over 230,000 investors, resulting in cumulative losses exceeding $3 billion.
The lawsuit doesn’t just target Gemini; it also includes former Genesis CEO Soichiro Moro and DCG founder and CEO Barry Silbert.
DCG’s Response
DCG has vehemently dismissed the lawsuit as baseless, expressing confidence in prevailing in court. Meanwhile, Genesis, which filed for bankruptcy in January 2023, has reached a settlement with the New York Attorney General’s office. However, this settlement is contingent upon fully repaying customers through the Chapter 11 bankruptcy process, pending approval from a bankruptcy judge.
A Storm is Brewing: Can Regulations Help Us?
Both Genesis and Gemini are also grappling with legal challenges from the U.S. Securities and Exchange Commission (SEC). The regulatory body claims they sidestepped disclosure requirements meant to safeguard Gemini Earn customers. While Genesis recently agreed to a $21 million fine with the SEC, Gemini is entangled in a legal tussle with DCG over issues related to their crypto-lending partnership.
The New York Attorney General emphasizes the pressing need for more robust cryptocurrency regulations. It is a crucial demand for safeguards to protect the interests of investors and cannot be ignored any longer.
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