Attorney General Letitia James Strikes Again: $50 Million Settlement Reached with Crypto Firm Gemini
In another significant victory for cryptocurrency investors (following this one we wrote about 3 weeks ago), New York Attorney General Letitia James has secured at $50 million settlement from Gemini Trust Company, LLC. This recovery benefits over 230,000 investors nationwide who were allegedly defrauded through the Gemini Earn program.
In the Gemini Earn downfall, Gemini, in collaboration with Genesis Global Capital, marketed the Gemini Earn program as a safe investment opportunity, promising investors a chance to grow their assets. However, the reality was far different. Attorney General James’ investigation led to claims that Gemini misled investors about the risks involved and allegedly locked them out of their accounts when the program collapsed.
The NYAG asserted that Gemini’s internal analyses had shown that Genesis’s financials were risky, with loans being under-secured and highly concentrated with a single entity—Sam Bankman-Fried’s Alameda. Yet, this critical information was not disclosed to the investors. The collapse of the Earn program left thousands of investors unable to access their funds.
Now, under the terms of the settlement, Gemini will return approximately $50 million worth of digital assets to those affected. Investors do not need to take any action to recover their assets, as they will be able to access them directly in their accounts. This marks a significant win for the defrauded investors, ensuring recovery.
Attorney General James’ statement captures the weight of the situation: “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. 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.”
This settlement is just one of many actions taken by the Office of the New York Attorney General to protect investors and regulate the cryptocurrency industry. The office has been at the forefront of these efforts, securing significant settlements from various cryptocurrency firms. Notable cases include a $2 billion settlement with Genesis, $22 million from KuCoin for failing to register as a broker-dealer, and $4.3 million from Coin Cafe for similar violations.
Earlier this month, AG James also filed a lawsuit against AWS Mining and NovaTechFX, claiming they “target[ed] immigrant communities and defraud[ed] them out of $1 billion.”. These actions highlight her office’s relentless commitment to safeguard the financial interests of New Yorkers.
Attorney General Letitia James’s recovery of $50 million from Gemini for investors who were allegedly defrauded marks a significant triumph in the fight against cryptocurrency fraud. This settlement not only compensates the victims but also reinforces the message that deceptive practices in the financial industry will be met with stern consequences. As AG James continues to lead the charge in protecting cryptocurrency investors, the cryptocurrency industry is reminded that integrity is non-negotiable.
Attorney General James put out a call for more whistleblowers, including “workers in the cryptocurrency industry who may have witnessed misconduct or fraud,” to come forward and report these issues to the NYAG’s office. The NYAG noted that whistleblowers can file anonymous online whistleblower complaints with her office.
If you have information about potential fraud against the government, cryptocurrency fraud, or fraud against investors and would like to speak to an experienced Constantine Cannon whistleblower lawyer team member, please don’t hesitate to contact us for a free and confidential consultation.