New York AG Letitia James has initiated a legal action against Gemini, Genesis, and Digital Currency Group (DCG). The lawsuit alleges that they engaged in activities that resulted in financial losses exceeding $1 billion for investors participating in the Gemini Earn program.
The official statement outlines allegations that the companies misled more than 23,000 investors, including 29,000 New York residents. The Attorney General’s investigation found that, despite assurances of low risk, Genesis’ financial situation was precarious.
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Gemini allegedly omitted critical information
Gemini allegedly knew the loans underpinning Earn were undercollateralized and concentrated with Alameda Research. However, they omitted this critical information from investors, according to the complaint.
The lawsuit also charges Genesis, former CEO Michael Moro, DCG, and its CEO Barry Silbert with concealment of over $1.1 billion in losses.
The Attorney General is seeking to ban the companies from New York’s financial industry and secure investor restitution. The statement highlighted losses suffered by middle-class investors under the premise of safe, growing returns.
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The New York AG asserted that Gemini hid the program’s risks, while Genesis lied about its difficulties. She portrayed the situation as another instance of harm caused by bad actors in crypto’s underregulated landscape.
In January, the SEC filed charges against Genesis and Gemini for unregistered securities related to Earn. The new lawsuit compounds legal troubles for the lending partners.