NY Attorney General Files Complaint Against Gemini, Genesis, and Executives Over $1.1B Losses
New York Attorney General Letitia James has filed a complaint against leading crypto exchange Gemini, crypto lending firm Genesis, and crypto investment company DCG, as well as two executives. Former Genesis CEO Michael Moro and DCG CEO Barry Silbert are named in the complaint. The legal action comes after a series of events that led to losses exceeding $1.1 billion.
According to the complaint, Gemini had lent funds to Genesis as part of its Earn program. These funds were subsequently lent out to counterparties, including Three Arrows Capital and Alameda. However, when several bankruptcies occurred within the space, Genesis experienced defaults, leaving the firm with a massive $1 billion deficit. The complaint alleges that in an attempt to conceal this loss, DCG falsely claimed it had absorbed the losses, when in reality, it had only issued a promissory note to its subsidiary, Genesis.
The New York Attorney General’s office is accusing both Gemini and the other entities of involvement in fraudulent schemes. With regards to Gemini, the complaint states that the exchange solicited funds from the public by presenting the Earn program as a highly liquid investment, making assurances about Genesis’ creditworthiness based on Gemini’s risk monitoring. As for DCG, Genesis, and the two named executives, the complaint alleges that they engaged in a deliberate campaign to obscure $1.1 billion worth of losses through misstatements, omissions, and concealment.
The complaint seeks to impose restrictions on the defendants’ ability to participate in the sales of securities and commodities within the state of New York. Additionally, it asks for damages, penalties, and the forfeiture of any profits gained through these activities.
The Block has reached out to both Gemini and Genesis for comment but has yet to receive a response.
Please note that this article is for informational purposes only and should not be construed as legal, tax, investment, financial, or any other form of advice.
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