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New York Takes Legal Action Against Major Crypto Firms

Crypto | Oct 19, 2023

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New York Attorney General Letitia James has taken legal action against prominent cryptocurrency firms, alleging fraudulent activities of over $1 billion.

The Allegations

The lawsuit targets cryptocurrency firms Genesis Global, its parent company Digital Currency Group (DCG), and Gemini, accusing them of "defrauding" investors of over $1 billion.

Central to the lawsuit is a program named "Gemini Earn," which allowed customers to lend crypto assets like bitcoin to Genesis. Despite Gemini promoting this as a "low-risk investment," internal analyses reportedly found Genesis to be on shaky financial ground.

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The Attorney General's office claims that Gemini was aware that Genesis' loans were undersecured and, at one point, heavily concentrated with one entity, Bankman-Fried's crypto hedge fund Alameda, which subsequently faced financial difficulties.

The lawsuit seeks restitution for investors, "disgorgement of ill-gotten gains," and a ban on the involved cryptocurrency firms from the financial investment industry in New York.

Reactions from the Accused

Gemini responded on a messaging platform, stating that the lawsuit "confirms what we've been saying all along" but disagreed with the decision to sue them.

DCG expressed surprise at the Attorney General's complaint, with CEO Barry Silbert labeling the lawsuit's allegations as "baseless." DCG has emphasized its cooperation with the Attorney General's investigation over the past months.

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This story is developing, and it will be interesting to see how it impacts the broader crypto industry and its reputation among investors.


NCFA Jan 2018 resize - New York Takes Legal Action Against Major Crypto FirmsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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