New York Attorney General Letitia James has filed a fraud case against Gemini, Genesis, and Digital Currency Group (DCG). In a statement, she said, “These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result.”

The case centers around Gemini Earn, a program that was presented to customers as a way to earn interest on crypto holdings. Under it, crypto lender Genesis used Gemini customers' assets to hand out loans to other parties for profit.

Genesis’ parent company is DCG.

According to the lawsuit, Genesis knowingly made high-risk loans and only made them out to a handful of parties. At one point, 60 percent of Genesis’ loans were to Alameda Research, the company currently involved in the lawsuit against FTX’s Sam Bankman-Fried. 

When FTX collapsed, Gemini Earn customers lost access to $900 million.

Aside from sufficiently warning clients of the risk and assessing the quality of loans it provided, the attorney general also said that Genesis and DCG tried to conceal the losses it incurred in 2022 when parties, including Three Arrows Capital, a hedge fund, defaulted on loans amounting to $1.1 billion. 

DCG CEO Barry Silbert and Genesis CEO Michael Moro, who are also defendants in the case, are alleged to have made misleading statements about the financial status of Genesis. 

This lawsuit follows the lawsuit filed by the Securities and Exchange Commission (SEC) against Genesis and Gemini. In January, the SEC claimed that Genesis Earn was an unregistered securities offering.

In a post on [X](https://twitter.com/GeminiTrustCo/status/1714984800660926608), Gemini said they are also victims of fraud. 

“We wholly disagree with the NY AG’s decision to also sue Gemini. Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.”

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Fri Oct 20 2023

NY Attorney General Sues Genesis, Gemini, and DCG for ‘Fraud’; Gemini Says They Were Defrauded Too