Gemini, a crypto trading platform, has denied any wrongdoing in a lawsuit filed by the New York Attorney General (NYAG) that accuses it of being part of a billion-dollar fraud scheme. Gemini said it was a victim of the fraud perpetrated by Genesis, a bankrupt lender, and its parent company, Digital Currency Group (DCG).
The NYAG alleged that Gemini, Genesis, DCG, and two executives lied to investors about the risks and returns of Gemini Earn, an investment program that involved lending money to Genesis.
The regulator claimed that Gemini knew that Genesis was in financial trouble and had exposure to the failed Three Arrows Capital (3AC) and Alameda Research, but failed to disclose this information to investors. The NYAG also accused Genesis and DCG of trying to conceal more than $1.1 billion in losses, which investors bore.
The NYAG is seeking to ban these companies and their executives from operating in New York and to provide restitution to all affected customers. Gemini, however, said that the lawsuit confirmed its claim that Genesis and DCG conspired to lie and defraud Gemini, Earn users, and other creditors.
Gemini Issued a Statement Responding to the Lawsuit
The lending firm said it was also a victim of the massive fraud and was misled by Genesis about its financial condition. It withdrew $282 million from Genesis in 2022 to boost its liquidity reserves after learning about its downgrade to Junk Grade.
In a statement released on October 19th via X (previously known as Twitter), the digital currency exchange Gemini asserted that the lawsuit filed by the New York Attorney General (NYAG) substantiated their allegations.
Today, the @NewYorkStateAG sued Genesis, its former CEO @michaelmoro, its parent company @DCGco, and DCG’s CEO @BarrySilbert personally for conspiring to lie and defraud Gemini, Earn users, and other Genesis creditors. The NY AG’s lawsuit confirms what we’ve been saying all along…
— GeminiTrustCo (@GeminiTrustCo) October 19, 2023
Gemini has found itself amid a controversy with DCG. The dispute centers around allegations that DCG was aware of its lender’s bankruptcy status since 2022, yet chose not to disclose this crucial information to its investors. As of the time of reporting, both Genesis and DCG have remained silent on the matter, offering no comments on either the lawsuit or the accusations leveled by Gemini.
