New York Attorney General Sues Gemini, Genesis, DGC For Investor Fraud

Jimmy Aki
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New York Attorney General Letitia James has started legal proceedings against Gemini, Genesis, and Digital Currency Group (DCG) cryptocurrency companies.

The lawsuit against these companies borders on deceiving investors and causing over $1 billion in loss through the Gemini Earn investment program.

AG James Seeks Compensation for Victims

On Thursday, the New York Attorney General filed an extensive legal action against three cryptocurrency entities.

These are Gemini Trust Company (Gemini), Genesis Global Capital, LLC, and its associated entities (Genesis), along with Digital Currency Group, Inc. (DCG).

The lawsuit revealed that there were alleged fraudulent activities that led to over 230,00 investors losing their funds, with at least 29,000 being New York residents.

An Office of the Attorney General (OAG) investigation uncovered that Gemini misled investors over an investment program known as Gemini Earn.

Gemini repeatedly assured investors that participating in the Gemini Earn program, which involved investing with Genesis, was a low-risk venture.

However, the OAG’s inquiry revealed that Gemini’s internal assessments of Genesis demonstrated significant financial risks.

The lawsuit argued that Gemini knew that Genesis’ loans were inadequately secured and, at one point, highly concentrated with a single entity, Sam Bankman-Fried’s Alameda.

However, this critical information was not disclosed to the investors.

The legal action further implicated Genesis, its former CEO Soichiro Moro, DCG, and DCG’s CEO Barry Silbert in defrauding investors and the general public. This was by attempting to hide losses exceeding $1.1 billion, ultimately burdening the investors.

These deceptive practices led to numerous investors suffering substantial financial losses, and in some heartbreaking cases, individuals lost their life savings.

One victim was a retired 73-year-old grandmother from New York who invested her life savings and her husband’s totaling over $199,000 in Gemini Earn due to their belief in Gemini’s marketing statements, touting it as a safe and secure choice.

She had intended to use these funds for her grandchild’s education but lost everything due to this fraud.

Another investor in Gemini Earn, a 56-year-old New Yorker, invested and subsequently lost nearly all his savings, amounting to approximately $20,500.

According to Attorney General James, “These cryptocurrency companies deceived investors and attempted to obscure losses exceeding a billion dollars, with middle-class investors suffering the most”.

She added that her office is committed to continuously combating deceptive cryptocurrency enterprises and advocating for stronger regulations to safeguard all investors.

Following this legal action, the Attorney General has planned to prohibit Gemini, Genesis, and DCG from participating in the financial investment sector in New York, including the recovery of investors’ lost funds.

Attorney General James’s Actions Against Crypto Fraud

This latest legal action is part of Attorney General James’ ongoing efforts to regulate the cryptocurrency industry and safeguard the interests of investors.

Recall that Attorney General James had unveiled comprehensive cryptocurrency legislation earlier this year aimed at bolstering crypto regulations for the protection of New York investors.

In June 2023, she successfully retrieved over $1.7 million from CoinEx due to its failure to register as a securities and commodities broker-dealer and its false representation as a crypto exchange.

Similarly, in May 2023, Coin Cafe was compelled to pay $4.3 million following allegations of failing to register as a commodity broker-dealer and engaging in investor fraud.

In another development, Attorney General James had filed a lawsuit against the former Celsius CEO for defrauding investors and lack of transparency about the company’s financial situation.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.