New York Attorney General Letitia James has filed a lawsuit accusing top cryptocurrency companies Gemini, Genesis, and Digital Currency Group of defrauding investors out of more than $1 billion.
The lawsuit centers around Gemini Earn, a crypto lending product offered in partnership with Genesis and its parent DCG. James alleges the companies made false claims about vetting and risks.
According to prosecutors, Genesis faced financial issues in 2022 that partners tried hiding from customers. Some Gemini staff even withdrew their own funds as concerns mounted.
When crypto markets declined, Genesis halted customer withdrawals from Earn in November 2022, freezing access to funds. James stated middle-class investors bore the brunt of the alleged fraud.
Both DCG and Gemini vowed to contest the claims and said they disagreed with being named in the lawsuit. The action follows the high-profile collapse of FTX and other crypto firms amid last year’s downturn.
James asserted the case exemplifies the harm caused by bad actors in the under-regulated crypto industry. The accusations underscore increased legal scrutiny of crypto lending activities that surged when interest rates were near zero.
