The cryptocurrency firms are caught in the domino of FTX's collapse
In the latest cryptocurrency crackdown, New York attorney general Letitia James said on Thursday (Oct. 19) that her office has sued Gemini Trust, Genesis Global, and Digital Currency Group (DCG) for defrauding some 230,000 investors of more than $1 billion.
The office accused Gemini of lying about an investment program called Gemini Earn, which was run in partnership with Genesis. Investors who loaned their crypto assets were promised up to 8% in interest. Despite the company’s internal reports showing risky financials, Gemini has repeatedly assured investors that investing in the program was a “low-risk investment.”
The New York suit is a follow up on the US Securities and Exchange Commission action against the same companies in January, saying it constituted an unregistered securities offering.
Genesis’s former CEO Soichiro Moro and DCG’s CEO Barry Silbert are also named in the lawsuit which accuses them of attempting to conceal more than $1.1 billion in losses.
“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result,” said attorney general James.
The lawsuit comes on the heels of the collapse of cryptocurrency exchange FTX and Alameda Research, its trading firm, where high debt, poor management, and attempts to hide the shortfalls marred the cryptocurrency industry in its attempt to bring the digital assets to wider acceptance.
The attorney general goes further to seek the ban of the three companies from the financial industry in New York.
Gemini Trust Company is a cryptocurrency exchange founded in 2014 by Cameron and Tyler Winklevoss, the twins known for suing Meta $META’s founder Mark Zuckerberg for stealing their social website, ConnectU, to create Facebook.
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