Gemini Trust Co. and Barry Silbert’s Digital Currency Group were sued by New York’s top law-enforcement officer for allegedly defrauding customers of $1.1 billion, escalating legal woes for two companies hit hard by last year’s plunge in cryptocurrency markets, Bloomberg News reported. The lawsuit filed today by New York Attorney General Letitia James accuses Gemini, which operated a crypto exchange, and DCG’s Genesis Global Capital unit of failing to disclose to investors the risks of a crypto-lending program they started in 2021. The venture’s assets collapsed last year amid several high-flying bankruptcies, including Sam Bankman-Fried’s FTX. Gemini, founded by Tyler Winklevoss and Cameron Winklevoss, lied to customers about how risky loans were in its venture with Genesis and failed to disclose that at one point, almost 60% of its third-party loans were to Bankman-Fried’s crypto trading firm Alameda Research, the state claims. Genesis and DCG were accused in the suit of trying to conceal spiraling losses. The claims by New York come after the US Securities and Exchange Commission in January sued Genesis and Gemini over their failed crypto-lender venture, known as Gemini Earn. And Genesis, which filed for bankruptcy, has sued its parent DCG seeking to recover about $620 million in outstanding loans. Gemini has also sued DCG as well as Silbert, seeking to recover “damages and losses” from alleged “fraud and deception.”
