cryptocurrency New York Attorney General took an important step against companies Letitia Jameshas filed a lawsuit against three major digital asset industry companies, accusing them of defrauding investors and hiding losses in a $1 billion scheme.
The case involves a stock exchange run by Tyler and Cameron Winklevoss. Gemini Trust, a credit company Genesis Capital, and Genesis’ parent company Digital Currency Group is targeting.
James alleges that Gemini misled investors about the risks associated with Gemini Earn, a program launched by Gemini and Genesis.
The program promised investors returns as high as 8 percent if they lent their cryptocurrencies to Genesis.
But the lawsuit alleges that Genesis ran into difficulties after the FTX cryptocurrency exchange founded by Sam-Bankman Fried collapsed last November.
The collapse in digital asset values led to accounts being frozen, leaving Earn investors unable to get back hundreds of millions of dollars of cryptocurrencies.
The lawsuit also alleges that Gemini was aware of the high risk associated with Genesis but failed to disclose this information to investors. This left at least 29,000 New Yorkers and hundreds of thousands more across the US unaware of potential risks to their assets.
Genesis and Digital Currency Group are also accused of trying to hide Genesis’ losses from Gemini, Earn investors and the public.
According to the lawsuit, the two companies concealed their financial problems when they signed a $1.1 billion, 10-year note with Genesis Digital Currency last year.
This deal was allegedly intended to give the false impression that Genesis was financially stable and to encourage investors to continue participating in the Earn program.
James said in a press release:
“This scam is another example of bad actors causing damage in the poorly regulated cryptocurrency industry.
“Our office will continue our push for stronger regulations to stop deceptive cryptocurrency companies and protect all investors.”
The lawsuit also names former Genesis CEO Soichiro Moro and Digital Currency CEO Barry Silbert.
*This is not investment advice.
For exclusive news, analysis and on-chain data Telegram our group, twitter our account and YouTube Follow our channel now! Moreover Android And iOS Start live price monitoring now by downloading our applications!