Today, the New York Attorney General (NYAG) Letitia James has brought charges against crypto companies Digital Currency Group (DCG), Gemini Trust, and Genesis. James has also leveled accusations against Genesis ex-CEO Michael Moro and DCG CEO Barry Silbert.
The Attorney General accuses the three firms of lying to investors and attempting to hide losses worth billions. She says middle-class crypto investors suffered the most due to the companies’ actions.
Crypto lender Genesis filed for bankruptcy in January. At the time, the company said the collapse of several cryptocurrency companies in 2022 was the key factor that fueled its decision to file for bankruptcy protection.
Gemini is one of the leading crypto exchanges. It is managed by twin brothers Cameron and Tyler Winklevoss. Digital Currency Group, on the other hand, is a big crypto-focused conglomerate, owning several firms in the blockchain sector, including CoinDesk, Genesis, and Grayscale.
Meanwhile, James alleges that these three firms scammed over 230,000 investors of more than $1 billion. In response to the allegations, a Digital Currency Group spokesperson says the Attorney General does not have evidence showing DCG’s wrongdoings. He adds that the company is ready for the legal battle and looks forward to clearing its name.
How Genesis, Gemini, and DCG Defrauded Investors Per the Lawsuit
According to the Attorney General, Gemini lied about Genesis’ creditworthiness to lure users to subscribe to the exchange’s Earn program. For starters, Earn users were earning yield on their crypto assets after Gemini partnered with Genesis to lend the users’ cryptocurrencies in exchange for interest. The program was halted earlier this year following Genesis’ move to file for bankruptcy. Earn users haven’t been able to withdraw their funds since then.
James says DCG used $1 billion of the Gemini customers’ funds to cover losses recorded by its subsidiary Genesis when crypto hedge fund Three Arrows Capital collapsed. Despite the losses, the Attorney General alleges that Silbert and Moro continued to lie about Genesis’ financial status.
Silbert took to X earlier today to claim that James’ allegations are baseless. He wrote that he has worked in integrity and honesty ever since he ventured into crypto.
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