{"id":32038,"date":"2023-10-19T20:28:02","date_gmt":"2023-10-19T20:28:02","guid":{"rendered":"https:\/\/innodebt.com\/business\/new-york-ag-accuses-crypto-firms-of-deceiving-investors-in-1-billion-fraud\/"},"modified":"2023-10-19T20:28:11","modified_gmt":"2023-10-19T20:28:11","slug":"new-york-ag-accuses-crypto-firms-of-deceiving-investors-in-1-billion-fraud","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=32038","title":{"rendered":"New York AG accuses crypto firms of deceiving investors in $1 billion fraud"},"content":{"rendered":"
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\n The fallout from the colossal implosion of Sam Bankman-Fried\u2019s crypto business is still rippling through the digital asset industry nearly a year later.\n <\/p>\n

\n On Thursday, New York\u2019s attorney general filed a lawsuit against three digital asset firms that were caught up in the collapse of Bankman-Fried\u2019s empire last fall \u2014 Gemini Trust, Genesis Global Capital and Digital Currency Group, parent company of Genesis. The lawsuit accused the companies of lying to investors and covering up more than $1 billion in losses.\n <\/p>\n

\n The AG\u2019s office said that an investigation found Gemini, the crypto firm founded by Cameron and Tyler Winklevoss, deceived investors about significant risks associated with a lending service it ran jointly with Genesis. The program, called Gemini Earn, marketed itself as a low-risk investment in which customers could lend crypto assets to Genesis while earning interest payments as high as 8%.\n <\/p>\n

\n \u201cThese cryptocurrency companies lied to investors,\u201d Attorney General Letitia James said in a statement. \u201cAnd it was middle-class investors who suffered as a result.\u201d At least 29,000 New Yorkers were among the 230,000 investors whose money was lost, James said.\n <\/p>\n

\n James\u2019 lawsuit is the latest effort among US officials to crack down on the trillion-dollar crypto industry, which for years has operated in the shadows of traditional financial regulation. Crypto advocates argue that regulators have dragged their feet in establishing guidelines for digital assets, which they believe are distinct from traditional securities like stocks or bonds.\n <\/p>\n

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\n In the immediate aftermath of the FTX crash, Genesis froze customer redemptions in its lending unit, citing market turmoil. The lending unit later filed for bankruptcy.\n <\/p>\n

\n According to the latest lawsuit, Gemini knew that Genesis\u2019 loans were risky and, at one point, \u201chighly concentrated\u201d with Bankman-Fried\u2019s crypto trading house Alameda Research. Bankman-Fried is currently on trial in federal court in New York, where he has pleaded not guilty to seven counts of fraud and conspiracy.\n <\/p>\n

\n \u201cGemini hid the risks of investing with Genesis, and Genesis lied to the public about its losses,\u201d James said.\n <\/p>\n

\n The lawsuit also names former Genesis CEO Soichiro \u201cMichael\u201d Moro and Digital Currency Group CEO Barry Silbert.\n <\/p>\n

\n Gemini\u2019s owners, the Winklevoss twins, have said Genesis owed more than $900 million to some 340,000 customers using the Earn program.\n <\/p>\n

\n The AG\u2019s lawsuit follows another civil action brought by the Securities and Exchange Commission, which in January sued Genesis and Gemini for offering unregistered securities through the Earn product.\n <\/p>\n

\n Gemini responded to the latest suit Thursday with a statement on X (formerly Twitter), claiming that Gemini itself was the victim of a \u201cmassive fraud.\u201d\n <\/p>\n

\n \u201cThe NY AG\u2019s lawsuit confirms what we\u2019ve been saying all along\u201d \u2014 that Gemini, its customers and other creditors were lied to about Genesis\u2019 finances. But the company said it \u201cwholly\u201d disagrees with the lawsuit.\n <\/p>\n

\n \u201cBlaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.\u201d\n <\/p>\n

\n Genesis and DCG didn\u2019t immediately respond to a request for comment.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The fallout from the colossal implosion of Sam Bankman-Fried\u2019s crypto business is still rippling through the digital asset industry nearly a year later. On Thursday, New York\u2019s attorney general filed a lawsuit against three digital asset firms that were caught up in the collapse of Bankman-Fried\u2019s empire last fall \u2014 Gemini Trust, Genesis Global Capital […]<\/p>\n","protected":false},"author":1,"featured_media":32039,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-32038","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nNew York AG accuses crypto firms of deceiving investors in $1 billion fraud | Innodebt<\/title>\n<meta name=\"description\" content=\"The fallout from the colossal implosion of Sam Bankman-Fried\u2019s crypto business is still rippling through the digital asset industry nearly a year later.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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