New York lawsuit charges crypto firms Gemini, Genesis with billion-dollar fraud

New York's Attorney General, Letitia James, recently filed a lawsuit against two cryptocurrency firms, Gemini and Genesis. The lawsuit alleges that these firms committed fraud, which resulted in investors losing over a billion dollars. Gemini Trust Company, which was established by the Winklevoss twins, Tyler and Cameron, who gained fame through their early involvement with Facebook, is accused of misleading investors. They allegedly downplayed the risks associated with investing in a programme that involved loans, which were at one point concentrated in Sam Bankman-Fried’s Alameda research trading firm. 'Investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn,' stated Attorney General James. Gemini had offered individuals the opportunity to lend cryptocurrencies in return for high returns through a programme called Gemini Earn. Some of these loans were given to the digital currency services platform, Genesis, which then lent cryptocurrency to other industry players. However, the bankruptcy of Bankman-Fried’s Alameda Research and its FTX platform last year caused a market panic. Bankman-Fried is currently on trial in New York, facing his own fraud charges. Genesis, unable to meet large withdrawal requests, filed for bankruptcy in January. 'Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses,' James said. Documents published at that time revealed that Gemini loans to Genesis amounted to approximately US$765 million. Gemini was founded by the Winklevoss twins, who were made famous by the film The Social Network, which chronicled the creation of Facebook. In a post on X, formerly known as Twitter, Gemini argued that the lawsuit validates their claim that the exchange and its users were 'victims of a massive fraud and systematically lied to' by Genesis. 'Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position,' Gemini stated in the post. James accused Gemini of deceiving more than 230,000 investors. Her lawsuit also alleges that former Genesis CEO Soichiro Moro and Genesis parent company DCG attempted to hide the massive losses. The lawsuit seeks to ban Gemini, Genesis and DCG from New York’s financial investment industry and demands restitution for investors who lost money. DCG defended itself in a post on X, denying any illegal activity. 'I am shocked by the baseless allegations in the attorney general’s complaint and intend to fight these claims in court,' DCG founder and CEO Barry Silbert stated in the post.