Gemini, NY AG agree to $50M settlement in crypto fraud lawsuit

Update: 

• New York Attorney General Letitia James reached a settlement with cryptocurrency exchange Gemini Trust Co. that will recover $50 million for Gemini Earn users after the prosecutor alleged the users were lied to, causing them to suffer losses in excess of $1 billion.
• The attorney general’s office published the consent order June 14, which stipulates Gemini is permanently banned from offering any crypto lending products in the state. 
• Gemini is also required to cooperate with the prosecutor as she takes on the other defendants, Genesis Global Capital and its parent Digital Currency Group. 
• James claims Genesis lied to its customers about its investment program Gemini Earn, causing at least 232,000 individuals to suffer financial harm.

Gemini crypto fraud lawsuit overview: 

• Who: New York Attorney General Letitia James filed a lawsuit against Gemini Trust Co. LLC, Genesis Global Capital, Digital Currency Group, Michael Moro, Barry E. Silbert and a pair of other Genesis entities. 
• Why: James argues the firms lied to customers about the investment program Gemini Earn, causing at least 232,000 individuals to suffer losses in excess of $1 billion. 
• Where: The lawsuit was filed in the New York Supreme Court. 

(Oct. 30, 2023)

New York Attorney General Letitia James has filed a lawsuit against cryptocurrency exchange Gemini Trust Co. and bankrupt crypto lender Genesis Global Capital and its parent Digital Currency Group. 

James claims Genesis lied to its customers about its investment program Gemini Earn, causing at least 232,000 individuals to suffer losses exceeding $1 billion. 

“Under the Gemini Scheme, Gemini solicited money from the public with false assurances that Earn was a highly liquid investment and that Genesis Capital was creditworthy based on Gemini’s ongoing risk monitoring,” the lawsuit states. 

James argues that, in reality, the company’s own confidential risk reports found Genesis Capital “posed a high risk of default,” despite allegedly publicly advertising the program as a “low risk” and “highly liquid investment” that could be redeemed “at any time.” 

Genesis entities disguised $1.1 billion in customer losses, says suit 

James argues the Genesis entities — along with Genesis Capital CEO Michael Moro and Digital Currency CEO Barry E. Silbert — disguised a total of $1.1 billion in customer losses through a monthslong campaign of “misstatements, omissions, and concealment.” 

“During the same period, Gemini encouraged the public and Earn investors to place a heightened degree of ‘trust and confidence’ in Gemini,” the Gemini lawsuit states. 

James is asking that the crypto firms be barred from doing business in the state of New York along with an award of damages and restitution. 

The lawsuit is preceded by a complaint filed by the U.S. Securities and Exchange Commission against Genesis and Gemini, with the agency arguing the Earn investment program amounted to an unregistered security. 

Were you injured financially after investing in the Gemini Earn program? Let us know in the comments.

The plaintiffs are represented by Geoffrey Andreu, John Ruth and Gabriel Tapalaga of the Office of the New York State Attorney General.

The Gemini crypto fraud lawsuit is The people of the State of New York by Letitia James v. Gemini Trust Co. LLC, et al., case number unknown, in the Supreme Court of the State of New York, County of New York. 

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