Gemini claims ‘victim’ status in NYAG’s billion-dollar lawsuit Gemini claims ‘victim’ status in NYAG’s billion-dollar lawsuit
Gemini said the lawsuit validates its claim that Genesis and its parent company, Digital Currency Group, conspired defraud creditors.
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Updated: Oct. 19, 2023 at 4:57 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto trading platform Gemini has responded to a lawsuit filed against it, bankrupt lender Genesis, and its parent company Digital Currency Group (DCG), by casting itself as a victim of the fraud perpetrated by the other two defendants.
According to Gemini’s statement on X (formerly Twitter), its addition to the lawsuit was tantamount to “blaming a victim for being defrauded and lied to.”
The lawsuit
On Oct. 19, New York Attorney General Letitia James filed a complaint against Gemini, Genesis, DCG, and two executives, including Genesis former CEO Michael Moro and DCG CEO Barry Silbert, for allegedly defrauding investors of over $1 billion through the defunct Gemini Earn investment program.
Gemini Earn was an investment program that allowed investors to earn interest from lending money to Genesis, who also lent it to others.
According to the regulator, Gemini repeatedly lied to investors about this investment program by repeatedly assuring them that it was a low-risk investment while knowing that Genesis’s finances were risky and had exposure to the defunct Three Arrows Capital (3AC) and Sam Bankman-Fried‘s embattled Alameda Research.
The regulator cited Gemini’s failure to inform investors of its downgrade of Genesis’ capital ratings to Junk Grade (CCC) from Investment Grade (BBB) as one of the many lies pushed by the exchange.
On the other hand, NYAG alleged that Genesis, its parent company, DCG, and their executives defrauded investors and the public by trying to conceal more than $1.1 billion in losses, which investors bore.
Consequently, NYAG seeks to permanently ban these companies and their executives from operating in New York. Additionally, the regulator is also seeking restitution for all affected customers.
Letitia James, New York’s Attorney General, said:
“Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn. Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses.”
Gemini says lawsuit proves its claims against Genesis
In its Oct. 19 statement on X (formerly Twitter), the cryptocurrency exchange said the NYAG lawsuit proved its claim that the bankrupt lender and its parent company conspired “to lie and defraud Gemini, Earn users, and other creditors.”
It said:
“The NY AG’s lawsuit confirms what we’ve been saying all along — that Gemini, Earn users, and other creditors were the victims of a massive fraud and systematically “lied to” by these parties about ‘Genesis’s financial condition.'”
Gemini has been involved in a public spat with DCG, alleging that it knew the lender had been bankrupt since 2022 but failed to inform investors.
Genesis and DCG have yet to respond to CryptoSlate’s request for comment as of press time.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerage providing a single point of access for select qualified individuals and global institutional investors.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
