By Keith Griffiths Dailymail.com and Reuters
22:11 09 2024, 22:28 09 2024 updated
- James expanded his lawsuit against crypto companies Genesis and Gemini on Friday.
- She is seeking $3 billion in damages from more than 230,000 investors.
- Claims Cryptocurrency Loan Scheme Was Falsely Promoted as Safe for Investors
New York Attorney General Letitia James on Friday expanded her lawsuit against cryptocurrency companies Genesis and Gemini, tripling the size of the alleged fraud scheme to more than $3 billion.
The amended complaint was filed in October by James against Digital Currency Group, its Genesis Global Capital unit, and Gemini Trust, an exchange run by twin brothers Cameron and Tyler Winklevoss. This is an expansion of the lawsuit filed by the government.
She alleged that she misled investors about the Gemini Earn program, which allows customers to lend crypto assets to Genesis in exchange for a high rate of return, causing losses of more than $1 billion.
As more investors come forward, the attorney general said, the “fraud perpetrated by DCG through Genesis” also entraps investors who sent money directly to Genesis and were falsely convinced that their funds were safe. said it has become clear.
Many of the additional investors were small retail clients, including a chiropractor and a stay-at-home dad who each invested $2 million in Bitcoin in Genesis, according to the complaint.
James is seeking more than $3 billion in damages from more than 230,000 investors who are believed to have been defrauded.
“This illegal cryptocurrency scheme and the horrific economic losses suffered by real people are yet another reminder of why we need stronger cryptocurrency regulation to protect all investors,” James said. said in a statement.
DCG CEO Barry Silbert and former Genesis CEO Soichiro Moro are also defendants.
A DCG spokesperson told DailyMail.com in a statement: This is the same as any unsubstantiated complaint that is recirculated to generate another headline.
“We will aggressively fight this claim and will definitely prevail. DCG has always operated lawfully and honestly, and DCG and Barry Silbert will be fully vindicated.”
Genesis will close after filing for bankruptcy in January 2023.
Gemini, run by the Winklevoss twins known for their legal battle with Meta founder Mark Zuckerberg, called Arn a “low risk” even though an internal analysis found Genesis' financial fundamentals to be risky. Mr. James claimed that he had been advertising.
Genesis bundled its funds into large loans to big names in the cryptocurrency space, including at one point a $2 billion loan to disgraced FTX founder Sam Bankman Fried's hedge fund Alameda Research. Nearby loans were also included.
The Alameda loan was recalled before the FTX collapse shocked the crypto industry, but James said it was among the risky and poorly collateralized loans that Gemini and Genesis were hiding from Earn investors. claims.
Days after the FTX implosion in November 2022, Genesis owed more than 232,000 Earn investors, including at least 29,000 New Yorkers, at least $1 billion and demanded withdrawals, according to a new lawsuit. It stopped.
Late Thursday, the company reached a settlement with James's office, agreeing to pay her fraud claims as long as it repays customers in full through the Chapter 11 process. The settlement must be approved by a bankruptcy judge.
Genesis filed for bankruptcy two months after halting withdrawals by Gemini Earn customers following the collapse of Sam Bankman Fried's FTX cryptocurrency exchange.
Both Genesis and Gemini were also sued by the U.S. Securities and Exchange Commission for allegedly circumventing disclosure requirements meant to protect Gemini Earn customers.
Genesis last week agreed to pay a $21 million fine to the SEC, also on the condition that it repays customers first.
Meanwhile, Gemini sued DCG over a failed crypto lending partnership.
