The New York Attorney General, Letitia James, has set her sights on three major players in the crypto space, alleging investor fraud. Genesis Global, its parent company, Digital Currency Group (DCG), and the renowned crypto platform Gemini find themselves in the crosshairs of a significant lawsuit.
Attorney General James accuses them of deceptive practices that have allegedly duped investors out of more than a billion dollars. But what led to such allegations against these crypto giants?
Gemini Earn: A Program Under Scrutiny?
Central to the lawsuit is the “Gemini Earn” program, a collaborative initiative between Gemini and Genesis. This program allowed users to lend their cryptocurrency assets, including Bitcoin, to Genesis.
Gemini, co-founded by the Winklevoss twins – known for their contentious legal spat with Meta Platforms’ CEO, Mark Zuckerberg, according to Reuters, – marketed this initiative as a “low-risk investment.” However, the New York Attorney General’s investigation suggests otherwise.
Despite Gemini’s confident portrayal of the program, James claims that internal analyses within the company had identified Genesis as being on shaky financial ground. Notably, such revelations would naturally conflict with their “low-risk” investment advertisement, potentially misleading countless investors.
Further deepening the intrigue, Attorney General James highlighted concerns regarding the security of Genesis’ loans. Specifically, they were undersecured, and a significant portion was heavily concentrated with one entity: the crypto hedge fund Alameda, spearheaded by Sam Bankman-Fried.
This hedge fund unfortunately met its demise, further exacerbating the risks and potentially endangering investors’ assets. According to the report, in a move to address these allegations, Gemini share their perspective acknowledging the lawsuit and stated it “confirms what we’ve been saying all along”.
However, they further expressed disagreement with the decision to include Gemini in the lawsuit.
Ongoing Developments Amid Challenges
Even amid legal scrutiny, Gemini continues to evolve its offerings. Recently, the exchange expanded its crypto suite by integrating XRP. As of August, users have been able to deposit XRP tokens into their Gemini accounts.
As reported by Bitcoinist, the platform allows trading of XRP through various avenues, including its API/FIX and ActiveTrader applications for USD trading pairs. Additionally, both the Gemini Mobile App and website have been updated to support XRP trading pairs in multiple currencies: USD, GBP, EUR, CAD, SGD, HKD, and AUD.
Notably, this update came not long after the recent victory achieved by Ripple Labs in the court battle against the US Securities and Exchange Commission (SEC).
Featured image from Unsplash, Chart from TradingView