In a seismic development rocking the cryptocurrency world, New York Attorney General Letitia James has taken bold action, filing a lawsuit against major players – Gemini Trust, Genesis Global, and Digital Currency Group (DCG). The charges? Defrauding a staggering 230,000 investors and siphoning over $1 billion.
This legal saga unveils a tangled web, implicating not just the companies, but also former Genesis CEO Soichiro “Michael” Moro and DCG founder Barry Silbert. The lawsuit alleges a web of deception, accusing these entities of concealing the true financial state of Genesis from the public eye.
The roots of this crisis trace back to the collapse of FTX, which set off a domino effect ensnaring Genesis and Gemini. The Earn program, a joint venture of these firms, led to significant losses after relying on faith in SBF’s empire, which ultimately crumbled, leaving billions in losses across the crypto industry.
The lawsuit paints a grim picture. Gemini stands accused of duping users, falsely assuring them of the safety of the Earn program, despite knowing that Genesis’s loans were undersecured and primarily funneled into Alameda Research. Shockingly, Gemini allegedly concealed the downgrade of Genesis’s credit rating from investment grade to junk from its customers.
Central to this saga is a colossal $1.1 billion promissory note between Gemini and Genesis’s parent company, DCG. This note, according to James’s office, played a pivotal role in Genesis’s financial downfall.
In a scathing statement, Attorney General Letitia James condemned this fraudulent affair, emphasizing its broader implications on the under-regulated cryptocurrency industry. This legal battle, with its twists and turns, unfolds as a stark reminder of the challenges faced in the evolving crypto landscape.