NYAG files complaint against Gemini, Genesis, DCG, Michael Moro and Barry Silbert over Earn product and covering up $1 billion hole

New York Attorney General Letitia James filed a complaint against crypto exchange Gemini, crypto lending firm Genesis, crypto investment company DCG and two executives: former Genesis CEO Michael Moro and DCG CEO Barry Silbert.

According to the complaint, Gemini lent funds to Genesis as part of its Earn program. These funds were ultimately lent out to counterparties including Three Arrows Capital and Alameda. When multiple bankruptcies in the space caused defaults to Genesis, it was left with a $1 billion hole. In covering up this hole, DCG claimed it had absorbed the losses when it had only made a promissory note to its subsidiary Genesis.

The NYAG took aim at both sides, claiming there were two fraudulent schemes. For Gemini, it claimed the exchange took money from the public claiming Earn was a highly liquid investment and that Genesis was creditworthy based on Gemini’s risk monitoring. For the other entities — DCG, Genesis and the two named executives — it claimed that they “disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment.”

The complaint asks for the defendents to be restricted from being involved in the sales of securities and commodities in the state of New York and to pay damages, penalties, and to give up any profits made from the activities.

We have reached out to Gemini and Genesis and will update this article should we hear back.

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