NY Attorney General Charges Crypto Affiliates Gemini, Genesis and DCG with Fraud

4 Min Read

According to the filing, the defendants launched an investment program called “Gemini Earn” in Feb. 2021 by which owners of cryptocurrencies could invest their crypto tokens with Genesis Capital as part of a high-yield investment program. Related StoriesSurviving a Horrible Year: Crypto Currencies Are Down but Not Out10/19/2023Trial of Crypto Tycoon Sam Bankman-Fried Kicks Off10/4/2023 Within months of its launch, Genesis Capital received several billion dollars from investors. The program succeeded until borrowers, among them Three Arrows Capital, began defaulting on their loans in the spring and summer of 2022. In November 2022, Genesis Capital suspended all withdrawals from Gemini Earn, leaving 232,000 investors in the program with more than $1 billion in losses, according to the New York AG’s suit. In addition, “the Genesis Entities, Moro, DCG, and Silbert disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment,” prosecutors charged. Representation of cryptocurrency Bitcoin is seen in this illustration taken on Nov. 29, 2021. (Dado Ruvic/Reuters) ‘Victims of a Massive Fraud’ In response to the charges, Gemini tweeted that “the NY AG’s lawsuit confirms what we’ve been saying all along – that Gemini, Earn users, and other creditors were the victims of a massive fraud and systematically ‘lied to’ by these parties about ‘Genesis’ financial condition.’” “With that said, we wholly disagree with the NY AG’s decision to also sue Gemini,” the company stated. “Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.” Among other things, the SEC charged that “in November 2022, Genesis announced that it would not allow its Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market. At the time, Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors.” Crypto Industry Challenges This has been a difficult year for the crypto industry. Not only has the crypto market lost two-thirds of its value from its peak in November 2021, a number of firms within the industry have faced charges for violating securities laws. The allegations from the New York AG come in the wake of charges of financial fraud that were filed by federal law enforcement against former FTX founder Sam Bankman-Fried, who is currently being tried before a jury in Manhattan. Several other former executives of FTX and its affiliates have already pled guilty to charges of fraud and money laundering. FTX logo in an illustration taken on March 31, 2023. (Dado Ruvic/Illustration/Reuters) In addition to the FTX scandal, the SEC charged Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao, with 13 violations on June 5, including operating unregistered exchanges, misrepresenting trading controls, and selling unregistered securities. “The SEC also alleges that Zhao and Binance exercise control of the platforms’ customers’ assets, permitting them to commingle customer assets or divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain,” according to an agency statement.

Share This Article
By admin
test bio
Leave a comment
Please login to use this feature.