New York State Attorney General Files Lawsuit Against Gemini and Genesis Global Capital Alleging $1.1 Billion Fraud Against 230,000 Investors

New York State prosecutors have filed a lawsuit against crypto exchange operator Gemini and DCG’s Genesis Global Capital unit, alleging that they defrauded more than 230,000 investors out of a collective $1.1 billion. The lawsuit was filed Thursday by the state’s top law enforcement officer.

Founded by Tyler Winklevoss and Cameron Winklevoss, Gemini allegedly deceived customers about the risk of the loans in the venture with Genesis and also failed to reveal that at one time, nearly 60% of its third-party loans were to Bankman-Fried’s crypto trading firm.

According to the lawsuit, Gemini and Genesis Global Capital allegedly did not disclose financial risks to those investing in a crypto-lending program they began in 2021. Prosecutors allege that to perpetrate the alleged fraud, Digital Currency Group and its subsidiaries and affiliates, including Genesis Global Capital and Genesis, lied to investors, created false financial documents and withheld information from creditors.

Gemini and Genesis Global Capital are accused of failing to adequately manage the risk associated with exposure to Sam Bankman-Fried’s bankrupt and allegedly fraudulent crypto trading firm. The lawsuit also claims that the companies collected crypto from its over-the-counter trading desk, prime brokerage and lender.

The New York State Attorney General’s Office is seeking restitution and damages for the investors who were allegedly defrauded. The lawsuit is ongoing and no further details have been released at this time.