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The lawsuit follows the collapse of FTX cryptocurrency exchange, founded by Sam Bankman-Fried, which led to frozen accounts and inaccessible investments. According to the suit, Gemini was aware of Genesis’ high-risk status due to its connections with Alameda Research, Bankman-Fried’s now-bankrupt crypto hedge fund. However, this information was not disclosed to investors.
Barry Silbert, CEO of Digital Currency Group, and former Genesis CEO Soichiro Moro are implicated in the suit for allegedly hiding Genesis’ financial difficulties through a $1.1 billion promissory note with Digital Currency. This case brings up previous SEC charges against Gemini and Genesis for offering unregistered securities as well as multiple class-action lawsuits against Gemini.
In response to these events, Attorney General James is advocating for the banning of these companies from New York’s financial investment industry. She is also seeking restitution for investors and proposing legislation that would require public audits of crypto exchanges.
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