2023-10-19 12:42:00
Cryptocurrencies
Attorney general Letitia James brings lawsuit once morest Genesis Global – and parent DCG – and Gemini
Archyde.com
Thu 19 Oct 2023 14.42 CEST
The New York attorney general, Letitia James, on Thursday sued the cryptocurrency firms Genesis Global, and its parent company Digital Currency Group (DCG), and Gemini for allegedly “defrauding” investors of more than $1bn.
Former FTX executive says he was ‘embarrassed and ashamed’ of its excess
At the heart of the lawsuit is a program Gemini ran in partnership with Genesis. Dubbed “Gemini Earn”, the program let customers lend crypto assets such as bitcoin to Genesis.
Gemini had billed the program as a “low-risk investment” even when its internal analyses had found Genesis was on risky financial footing, James alleged.
The development underscores the challenges the crypto industry continues to face almost a year following the bankruptcy of Sam Bankman-Fried’s exchange FTX, which had led to an industry meltdown.
The turmoil eventually hit Genesis, which in January filed for bankruptcy. Genesis has clashed with Gemini, its largest creditor, several times over the past few months.
Gemini knew Genesis’s loans were undersecured and at one point highly concentrated with one entity, Bankman-Fried’s crypto hedge fund Alameda that later went belly up, James said.
It did not reveal any of this information to the investors of Gemini Earn, she added.
Genesis and its former CEO Soichiro Moro as well as DCG and its chief, Barry Silbert, have also been charged with trying to conceal more than $1.1bn in losses.
DCG and Gemini did not immediately respond to Archyde.com’ requests for comment.
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