New York Attorney General Letitia James has filed a lawsuit against cryptocurrency industry players Gemini Trust, Genesis Global Capital, and Digital Currency Group (DCG). The legal action revolves around Gemini Earn, a joint venture between Genesis and Gemini that promised high returns on cryptocurrency deposits. However, James alleges that these returns were based on misleading information, resulting in significant financial losses for investors.The lawsuit reveals that Gemini’s internal risk analyses indicated that loans to Genesis were risky, but this information was not disclosed to investors. Alameda Research, led by Sam Bankman-Fried, accounted for nearly 60% of all outstanding loans from Genesis, raising concerns due to Bankman-Fried’s ongoing criminal trial related to the collapse of FTX and Alameda.The suit also claims that Gemini adjusted Genesis’s credit rating from investment grade to junk in February 2022 but failed to make this update public. Discussions about discontinuing Gemini Earn due to associated risks were reportedly held in July 2022, with some of the exchange’s risk personnel withdrawing their investments from the program.The lawsuit highlights the case of a retired 73-year-old grandmother who invested her life savings of $199,000 in Gemini Earn, influenced by the product’s marketing statements. This case represents the broader impact on middle-class investors that Attorney General James emphasized.Letitia James has established herself as a proactive regulator in the cryptocurrency space, previously taking action against Tether, Bitfinex, and former Celsius CEO Alex Mashinsky. In May, she proposed comprehensive cryptocurrency legislation, leading to a clash with the Department of Financial Services.The latest lawsuit follows the SEC’s legal action against Genesis and Gemini, alleging that Gemini Earn constituted an unregistered offer and sale of securities. Gemini responded with a suit against Genesis’s parent company, DCG, and CEO Barry Silbert, accusing them of fraud and deception.As negotiations continue regarding the release of trapped funds from Gemini Earn, Attorney General James’s lawsuit adds another layer of complexity to the operations of these crypto giants. The suit aims to seek restitution for investors, impose disgorgement penalties, and prevent Gemini, Genesis, and DCG from engaging in activities related to securities and commodities in New York.
This News Article was automatically generated by Bob the Bot (AI)
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | Letitia James |
| Companies | Digital Currency Group (DCG), Alameda Research, Genesis Global Capital, Gemini Trust, SEC |
| Currencies | None |
| Securities | None |
