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NY Attorney General Secures Historically Large Settlement with Cryptocurrency Companies and Asks Whistleblowers to Come Forward 

Posted  May 28, 2024

The Office of the New York Attorney General (“NYAG”) recently announced that it reached a settlement worth $2 billion with cryptocurrency firms Genesis Global Capital, LLC; Genesis Asia Pacific PTE, LTD.; and Genesis Global Holdco, LLC (collectively, “Genesis”). The settlement, which the press release reports to be “the largest against a cryptocurrency company in state history,” will “establish a victims fund to help defrauded investors, including at least 29,000 New Yorkers, who contributed more than $1.1 billion to Genesis through the Gemini Earn investment program.”  

Here’s some history about the case.  Back in October 2023, the NYAG sued the Genesis companies mentioned above, as well as Gemini Trust Company, LLC, Digital Currency Group, Inc. (“DCG”), and two individuals, alleging that “two distinct fraudulent schemes” caused an investment program called “Gemini Earn” to result in tremendous losses for investors. The first alleged scheme was that “Gemini solicited money from the public with false assurances that Earn was a highly liquid investment and that Genesis Capital was creditworthy”; “[h]owever, Gemini’s confidential risk reports found that Genesis Capital posed a high risk of default.”  The second alleged scheme involved “disguis[ing] $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment.”  

Then, in February 2024, the NYAG amended its complaint to expand the lawsuit by adding allegations that defendants “defraud[ed] additional individuals and institutions of an additional $2 billion.” The NYAG stated that the amended complaint was the result of complaints from “additional investors [who came] forward to share their experiences and their losses….”  

In this case, the historically large settlement reached will not be the last word. According to the NYAG, its case will continue as to the remaining defendants not part of the settlement. Stay tuned as there’s more to come.  

In announcing the settlement, the NYAG reiterated the importance of whistleblowers who come forward to make prosecutors aware of fraud or other misconduct and help their investigation. In the press release, New York Attorney General Letitia James “encourage[d] 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.”  

If you have information about potential fraud against the governmentcryptocurrency 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.