Attorney General James Recovers $50 Million from Crypto Firm Gemini for Defrauded Investors
New York Attorney General Letitia James today recovered approximately $50 million from the cryptocurrency platform Gemini Trust Company, LLC (Gemini) for more than 230,000 investors, including at least 29,000 New Yorkers, who invested in the Gemini Earn program and were defrauded. Gemini allegedly misled thousands of investors on the risks associated with Gemini Earn, an investment program it offered with another cryptocurrency company, Genesis Global Capital (Genesis). The settlement provides all defrauded investors full recovery of the assets they invested in the Earn program but were unable to withdraw when the investment program collapsed. Today’s settlement follows Attorney General James’ $2 billion settlement with Genesis, resolves claims against Gemini, bans Gemini from operating any cryptocurrency lending program in New York, and requires the company to cooperate with the Office of Attorney General’s (OAG) litigation against Digital Currency Group (DCG), DCG’s CEO Barry Silbert, and Genesis’ former CEO Soichiro Moro.
“Hundreds of thousands of people, including at least 29,000 New Yorkers, had their trust broken and their money swindled by Gemini through its bogus Earn program,” said Attorney General James. “Gemini marketed its Earn program as a way for investors to grow their money, but actually lied and locked investors out of their accounts. Today’s settlement will make defrauded investors whole and should remind cryptocurrency companies that deceiving investors is illegal and will not be tolerated by my office.”
Under today’s settlement, Gemini will return approximately $50 million worth of digital assets to Gemini Earn investors who were locked out of their accounts. Investors do not need to take any action to recover their digital assets and they will be able to access their digital assets in their accounts.
In October 2023, Attorney General James sued Gemini for lying to investors about its Gemini Earn program. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. However, OAG’s investigation found that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. The lawsuit alleged that Gemini knew Genesis’ loans were under-secured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors. Last month, Attorney General James secured $2 billion from Genesis for defrauded victims.
Attorney General James urges New Yorkers who have been deceived by cryptocurrency companies to report these issues to OAG. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.
Attorney General James has been a nationwide leader in the effort to protect investors and rein in the cryptocurrency industry. Earlier this month, Attorney General James filed a lawsuit against cryptocurrency companies AWS Mining, NovaTechFX, and NovaTechFX’s founders for targeting immigrant communities and defrauding them out of $1 billion. In December 2023, Attorney General James secured more than $22 million from KuCoin, one of the largest cryptocurrency trading platforms, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. In May 2023, Attorney General James secured $4.3 million from Coin Cafe for failing to register as a commodities broker-dealer and defrauding investors. In January 2023, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally. Attorney General James also sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition.
This matter was handled by Assistant Attorneys General Geoffrey Andreu, John Ruth, and Stephanie Torre, Attorney General Fellow Shelbi Molin, and Senior Enforcement Counsel Gabriel Tapalaga of the Investor Protection Bureau, with assistance from Principal Accountant Shalendra Ramadhin and Legal Assistant Eddie Aguilar, also of the Investor Protection Bureau, and Detective Investigator Frank Tirri of the Investigations Division. Complex data analysis was provided by former Data Analyst Anushua Choudhury under the supervision of Acting Deputy Director Gautam Sisodia of the Division of Research and Analytics, which is led by Director Victoria Khan. The Investor Protection Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo. The Division of Economic Justice is overseen by First Deputy Attorney General Jennifer Levy.
