Feb 9, 2024 - Business

New York amends Gemini Earn lawsuit to reflect $3 billion in alleged losses

New York Attorney General Letitia James pointing during a press conference.

New York Attorney General Letitia James. Photo: Michael M. Santiago/Getty Images

New York Attorney General Letitia James amended the state's lawsuit Friday against cryptocurrency firms Digital Currency Group, Genesis and Gemini, saying the alleged fraud cost investors more than $3 billion.

Why it matters: The new figure nearly triples the amount the AG initially alleged was lost in the Gemini Earn program.

Between the lines: The tenor of the amended complaint suggests that the AG is increasing its focus on DCG, the parent company to crypto lender Genesis.

  • "After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions," James said in Friday's statement. "The fraud and deceit were so expansive that many additional people have come forward to report similar harm."

The other side: "There is nothing new here," a DCG spokesperson told Axios in a statement. "This is the same baseless complaint recirculated to generate another round of press headlines. We will fight the claims aggressively and we will win. DCG has always conducted its business lawfully and with integrity."

Catch up fast: Gemini Earn promised investors yield on deposits of various cryptocurrencies.

  • To generate that yield, Gemini, a crypto exchange, invested Earn deposits with its program partner, the lender Genesis.
  • The AG alleges that despite marketing the program as a low-risk investment, Gemini had known that Genesis' financials showed significant risks.

Zoom in: Genesis filed a settlement pertaining to its role in the suit Thursday, in which it agreed to cease doing business in New York. That agreement requires bankruptcy court approval, with a hearing scheduled for February 14.

  • And any claim the state has against the firm based on the lawsuit will sit behind those of everyone else Genesis owes money to, according to the settlement agreement.

The intrigue: Despite being a subsidiary of DCG, Genesis has been run independently during its bankruptcy.

What we're watching: The state might want to take at least some of the entities it has sued all the way to court.

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