NY AG SUES GEMINI, GENESIS, DCG FOR $1 BILLION IN CRYPTO FRAUD

NY AG charges Gemini, Genesis, and DCG hid over $1 billion in losses from investors and misled regulators despite warning signs.

New York Attorney General Letitia James has filed a lawsuit against cryptocurrency firms Gemini, Genesis Global Capital, and its parent company, Digital Currency Group (DCG) for defrauding investors out of more than $1 billion. The firms are accused of hiding over $1.1 billion in losses despite apparent warning signs.
The lawsuit alleges that Gemini, founded by Cameron and Tyler Winklevoss, assured investors their investments were safe in the Gemini Earn program it ran with Genesis, which later went bankrupt. However, the suit claims Genesis' loans were actually risky and concentrated with Sam Bankman-Fried's crypto hedge fund, Alameda Research, a fact that Gemini allegedly knew but did not disclose.
Gemini and Genesis were also sued by the US Securities and Exchange Commission in January for allegedly violating securities rules. Genesis declared bankruptcy in January 2023, and at the time of its collapse, it was indebted to over 230,000 investors to the tune of $1.1 billion.
The New York AG's lawsuit calls for restitution for investors from the three companies and seeks to ban the firms from doing business in New York. Gemini, however, defends itself stating it was also a victim of the fraud.
The lawsuit is part of a broader crackdown on crypto companies, with several major exchanges and crypto firms facing similar lawsuits and regulatory scrutiny this year. The implications of the lawsuit may also affect the approval of a bitcoin exchange-traded fund (ETF), a key development anticipated in the cryptocurrency market.