The New York Attorney General, Letitia James, has taken legal action against several cryptocurrency companies, including the Gemini Trust exchange founded by the Winklevoss twins, Genesis Global Capital, and Digital Currency Group. The attorney general’s office alleges that these cryptocurrency firms collectively lost over $1 billion of investors’ funds. Letitia James emphasized the need for stronger regulations to protect investors and to curb deceptive practices in the cryptocurrency industry.
Gemini and its affiliates, including Genesis, were accused of fraud in a lawsuit filed on October 19. The lawsuit claims that these companies misled clients by promoting their Gemini Earn program as a low-risk, high-return investment opportunity. However, approximately 232,000 Gemini Earn investors had their accounts frozen, and some reportedly lost their life savings.
Gemini had launched its “Gemini Earn” crypto investment platform in collaboration with crypto lender Genesis Capital and Digital Currency Group in 2021. However, Genesis filed for bankruptcy in January, with the Winklevoss twins reportedly withdrawing around $280 million before the fund’s distress became apparent. This resulted in customers being unable to access their funds, as deposits were frozen in November 2022.
The legal action by the New York Attorney General also extends to other crypto platforms, including CoinEx, Coin Cafe, KuCoin, Nexo, and Celsius, which are accused of failing to register as securities companies and defrauding investors.
The impact of these legal actions on the cryptocurrency industry remains to be seen, but they highlight the ongoing need for regulatory oversight in this rapidly evolving and often controversial sector.
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