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Following the series of crypto credit bankruptcies last year, numerous lawsuits have been filed. The FTX process is still ongoing, and there is also the unresolved Genesis bankruptcy process. When the crypto credit frenzy, which we owe to the 2021 bull market, collapsed last year, DCG and its subsidiaries suffered the biggest blow. Genesis was at the forefront.
A New Crypto Lawsuit
A lawsuit filed today by New York State Attorney General Letitia James is set to make waves. It was revealed that Gemini misled investors about its collaboration with Genesis. The crypto exchange Gemini claimed that its Earn program was extremely low-risk and its own service. However, it was revealed that they worked with Genesis and provided high-risk loans to individuals, such as SBF, who turned out to be fraudsters.
Gemini repeatedly guaranteed investors that the Gemini Earn program was low-risk, but the lawsuit claims that Gemini knew about the low collateral of Genesis’s loans. New Gemini and Genesis officials could foresee a bad outcome.
In the lawsuit, James accuses Genesis, former CEO Soichiro Moro, the parent company DCG, and DCG CEO Barry Silbert. According to the lawsuit, Genesis concealed losses exceeding $1.1 billion, causing thousands of investors to lose their money.
The Attorney General is demanding that Gemini, Genesis, and DCG be banned from the financial investment sector in New York, and that compensation be paid to investors and profits be returned.
James stated the following:
“Hardworking New Yorkers and investors across the country lost over a billion dollars because they were fed blatant lies, such as the false promise that their money would be safe and grow if they invested in Gemini Earn. Instead of disclosing the risks of investing with Genesis, Gemini concealed them, and Genesis lied to the public about its losses. This fraud is yet another example of how bad actors can cause harm in the under-regulated crypto industry.”
