Today New York Attorney General (NYAG) Letitia James filed a lawsuit against Winklevoss-owned Gemini Trust, bankrupt crypto lender Genesis and its parent Digital Currency Group (DCG). It alleges they defrauded 230,000 investors of more than $1 billion through a crypto lending program.
Gemini Trust offered clients a crypto deposit scheme Gemini Earn, allowing them to earn interest. Genesis managed the money on behalf of Gemini, lending out the funds. However, the lending was highly concentrated on Sam Bankman-Fried’s Alameda (60% at one point), so when Alameda collapsed so did Genesis.
The lawsuit alleges that Gemini Trust’s internal analysis showed Genesis was risky, yet Gemini assured investors it was low risk. In February 2022, Gemini downgraded its credit rating estimate for Genesis from BBB to CCC (junk) without disclosing that to investors. A 73-year old grandmother invested her life savings of $199,000 in Gemini Earn, relying on statements about its safety.
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