The New York State Attorney General (AG) Letitia James has filed a lawsuit against three major crypto firms, accusing them of defrauding over 230,000 investors and concealing $1.1 billion in losses. The defendants are the crypto exchange Gemini, the lending platform Genesis and the investment company Digital Currency Group (DCG).
According to the press release, the AG alleges that Gemini misled investors about the risks of its Gemini Earn program, which offered high returns on crypto deposits. Gemini partnered with Genesis to lend out the crypto assets of its customers. However, Genesis was insolvent and unable to repay the loans after one of its borrowers, Three Arrows Capital, collapsed in June 2022.
The AG also claims that Genesis and DCG lied to the public about their financial situation and fabricated financial reports to hide their losses. The lawsuit names former Genesis CEO Soichiro Moro and DCG CEO Barry Silbert as co-conspirators in the fraud scheme.
The AG seeks to ban the three firms from operating in New York and to compensate the investors for their losses. The AG also warns of the dangers of the unregulated crypto industry and vows to protect investors from deceptive practices.