Key Points:
The Gemini and DCG lawsuit now seeks restitution for over 230,000 investors who were reportedly misled about the safety of their investments.
Initially filed seeking $1.1 billion in October, the civil complaint was amended after additional DCG investors alleged they were misled about their investments’ safety. The amended suit doesn’t introduce new allegations against Gemini.
The lawsuit accuses Gemini and DCG’s Genesis Global Capital of failing to disclose the risks of a crypto-lending program initiated in 2021, which collapsed last year amid bankruptcies, including FTX’s Sam Bankman-Fried.
Attorney General James stated, “The fraud and deceit were so expansive that many additional people have come forward to report similar harm,” emphasizing the need for stronger cryptocurrency regulations.
Gemini, founded by Cameron and Tyler Winklevoss, purportedly misled customers about loan risks in its partnership with Genesis, with almost 60% of third-party loans allegedly going to Bankman-Fried’s Alameda Research. The suit claims Genesis concealed losses, including over $1 billion invested in Three Arrows Capital and over $100 million lost from Babel Finance.
DCG has denounced the Gemini and DCG lawsuit as baseless, asserting its intent to contest the claims. Genesis, which filed for bankruptcy in January 2023, reached a settlement with James’ office, contingent on repaying customers through Chapter 11 proceedings.
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