NYC Attorney General Levels Major Fraud Lawsuit Against Crypto Firms

The New York attorney general filed a lawsuit Thursday accusing three major cryptocurrency players of lying to investors and concealing losses in a $1 billion fraud scheme, Ephrat Livni reports for the New York Times. Attorney general Latitia James targets Gemini Trust, the lender Genesis Capital and Digital Currency Group, the parent company of Genesis, in the lawsuit, alleging that Gemini lied to investors about the dangers of Gemini Earn, a program started by Gemini and Genesis that promised investors a high rate of return if they essentially lent their cryptocurrency to Genesis.

James accuses Gemini of hiding the fact that it froze accounts amid a crash in digital asset values, effectively blocking investors from accessing hundreds of millions of dollars’ worth of cryptocurrency. The lawsuit alleges Genesis and Digital Currency Group tried to conceal Genesis’ losses from Gemini Earn investors and the public. James is seeking to bar Gemini, Genesis and Digital Currency Group from operating in the financial investment industry or doing any business related to the sale and purchase of securities in New York. She is also seeking restitution for investor losses.