Suit charges crypto firms with billion-dollar fraud
NEW YORK
New York's attorney general on Oct. 19 filed a lawsuit accusing cryptocurrency firms Gemini and Genesis with fraud that wound up costing investors more than $1 billion.
Gemini Trust Company, created by twin brothers Tyler and Cameron Winklevoss of early Facebook fame, misled investors about the risk of putting money into a program that involved loans that at one point were concentrated in Sam Bankman-Fried's Alameda research trading firm, according to the suit.
"Investors around the country lost more than $1 billion because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn," New York attorney General Letitia James said in a release.
Gemini offered people the chance to lend cryptocurrencies in exchange for high returns via a Gemini Earn program, according to the suit.
Those loans included some to digital currency services platform Genesis, which in turn lent cryptocurrency to other players in the industry.
But the bankruptcy of Bankman-Fried's Alameda Research and its FTX platform last year triggered panic in the market.
Bankman-Fried is currently on trial in New York, facing fraud charges of his own.
Unable to honor massive withdrawal requests, Genesis filed for bankruptcy in January.
"Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses," James said.
According to documents published at that time, Gemini loans to Genesis tallied some $765 million.
