The three major crypto firms, Gemini, Genesis Global, and DCG, have been sued for allegedly defrauding hundreds of thousands of investors.
Letitia James, the New York attorney general, announced that her office has charged Gemini Trust, Genesis Global, and Digital Currency Group (DCG) for defrauding over 230,000 investors with more than $1 billion.
According to a filing, the lawsuit has also charged former Genesis CEO Soichiro “Michael” Moro and DCG founder Barry Silbert with hiding the financial condition of Genesis from the public.
Genesis and Gemini have been caught in a domino formed by the FTX collapse. Both of these firms were partnered in offering the Earn program to users, whose funds they invested in SBF’s faith. The fragile empire of SBF collapsed, which resulted in the loss of billions of dollars from a number of crypto companies.
The lawsuit filed on October 19 alleges that Gemini lied to its users by assuring that the Earn program was safe. Attorney General Letitia’s office stated that Gemini knew that the loans Genesis had were undersecured and were all primarily directed to Alameda Research.
It further alleges that Geminin revised Genesis’ credit rating from investment grade to junk while not disclosing it to customers.
ames Office also mentioned that a promissory note of $1.1 billion between Gemini and Genesis’s parent company, DCG, was the reason behind the firm’s poor financial condition.
“This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry,” said attorney general Letitia James in a statement.