The lawsuit claims that several cryptocurrency and technology companies deceived investors, robbing them of their life savings and taking more than $1 billion in funds.
New York Attorney General Letitia James has filed a sweeping fraud lawsuit against three cryptocurrency companies, claiming that they lied to investors while concealing massive losses.
According to The New York Times, the complaint names defendants including Gemini Trust, Gensis Capital, and the Digital Currency Group, the parent company of Gensis.
In her lawsuit, James says that Gemini misled its own investors about the dangers of Gemini Earn, a program started by Gemini and Gensis. It promised investors a high rate of turn—up to 8%–on the condition that they lent their cryptocurrency to Gensis.
However, Genesis struggled after the FTX exchange failed last November, leaving hundreds of millions of dollars in digital assets frozen or otherwise inaccessible.
“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result,” James said in a statement published to her office’s website.
“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,” she said. “Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses. This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry. My office will continue our efforts to stop deceptive cryptocurrency companies and push for stronger regulations to protect all investors.”
The website of the Attorney General of New York shared several investor stories.
In one account, a 56-year-old Gemini investor lost savings equivalent to $20,500. The investor told James’s office that he had chosen Gemini Earn because he had researched the product and came to believe, based on Gemini’s own statements, that it offered a more secure platform than other cryptocurrency investment products.
Another investor, a 73-year-old “retired grandmother,” invested her family’s “lifesavings” of over $199,000.
In both cases, the investors lost everything they had put into Gemini Earn.
Gemini has since issued a statement on X, simultaneously applauding the lawsuit and condemning James’s decision to name Gemini as a defendant.
The filing, Gemini said, “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, though, stressed that it “wholly” disagreed with its inclusion in the lawsuit, saying that it is equivalent to “blaming a victim for being defrauded.”
James, adds the New York Times, has filed other, similar complaints against cryptocurrency companies, most intended to combat fraud and provide compensation for victims.