New York State Attorney General (AG) Letitia James is suing three major crypto companies for allegedly defrauding more than 230,000 Americans.
In a new press release, AG Letitia James says she is taking legal action against cryptocurrency exchange Gemini, lender Genesis and investment giant Digital Valuta Group (DCG) over allegations that the companies tried to hide $1.1 billion in losses and “repeatedly lied” to its investors.
Investigations revealed that Gemini lied to investors about the risks of its Gemini Earn program, which aimed to offer customers returns on their crypto assets. Gemini partnered with Genesis to facilitate the service.
James also claims that Genesis’ loans were at one point “undersecured” and on one occasion were concentrated within Alameda Research, the trading arm of now-bankrupt crypto exchange FTX and under the control of disgraced CEO Sam Bankman-Fried.
The lawsuit also targets former Genesis CEO Soichiro Moro and DCG CEO Barry Silbert.
AG James says the lawsuit also aims to ban all three companies from New York’s financial investment industry. and calls for compensation for investors’ losses and the removal of the companies’ “ill-gotten gains.”
Says the New York State Attorney General:
“These cryptocurrency companies lied to investors and tried to hide over a billion dollars in losses, and it was middle class investors who suffered…
Hardworking New Yorkers and investors across the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn. Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses. This fraud is yet another example of bad actors wreaking havoc in the under-regulated cryptocurrency industry. My office will continue our efforts to stop deceptive cryptocurrency companies and push for stronger regulations to protect all investors.”
Genesis went bankrupt early this year and owed $735 million to Earn program members during the collapse.
Gemini co-founder Cameron Winklevoss alleged that DCG, Silbert, other executives and Genesis prepared false financial reports to deceive their creditors and maintain the illusion that all was well.
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Featured image: Shutterstock/Aleksandr Kukharskiy