Winklevoss twins back in hot water after NY AG sues over $1B cryptocurrency fraud

SBF comes up like a bad penny

Updated New York's Attorney General Letitia James is going after cryptocurrency shenanigans and the Gemini Trust Company, set up by the Winklevoss twins who claimed to have inspired Facebook, is one of those in the firing line.

Cryptocurrency trading corp Gemini, financial firm Genesis Global Capital, and parent Digital Currency Group (DCG) have been sued for allegedly defrauding more than 230,000 investors. The complaint [PDF], which also names former Genesis CEO Soichiro Moro, and DCG’s CEO Barry Silbert, claims that Gemini partnered with Genesis to create a low-risk offering called Genesis Earn that made risky loans with investors' money and lost more than $1.1 billion in doing so.

In mid-2022, according to the complaint, the largest borrower of investor funds was none other than the notorious SBF - Sam Bankman-Fried's Alameda Research. Bankman-Fried is currently on trial for fraud related to the collapse of cryptocurrency platform FTX and his related investment firm Alameda.

On November 16 last year, Genesis announced via the social media platform then known as Twitter that it was suspending redemptions and would not be allowing its 230,000 Earn investors to withdraw their money as it lacked sufficient funds.

The complaint cites several victims, including a 73-year-old grandmother who, along with her husband, lost $199,000 invested in Gemini Earn that she had hoped to use to pay for the education of her grandchildren. In a note to the company pleading for the return of her funds, she wrote, "Are you going to be able to give us our money any time soon? I am crying all day. I am 73 years old and without that money I am doomed."

On January 19 Genesis and related entities declared bankruptcy.

Last month, the New York Post reported that Gemini, co-founded by successful Facebook litigants Tyler and Cameron Winklevoss, withdrew hundreds of millions of dollars from Genesis several months prior to its collapse.

Gemini subsequently disputed part of Post's report, claiming the funds belonged to customers and not the company or its founders. The company accused the New York Post of credulously reporting information provided by Silbert, CEO of DCG, to sway public opinion.

Gemini sued DCG and Silbert in July for financial misrepresentations.

NYAG James said the cryptocurrency firms lied to investors about the investment risks involved in dealing with digicash and tried to conceal more than a $1 billion in losses, at the expense of investors.

"Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn," said James. "Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses."

Gemini and Genesis were sued in January by the US Securities and Exchange Commission for allegedly violating securities rules.

Asked for comment, a Gemini spokesperson pointed to the company's statement on Twitter, or X as the Elon Musk-run biz is now called.

"The NY AG’s lawsuit confirms what we’ve been saying all along — that Gemini, Earn users, and other creditors were the victims of a massive fraud and systematically 'lied to' by these parties about 'Genesis’s financial condition,'" the company said.

"With that said, we wholly disagree with the NY AG’s decision to also sue Gemini. Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position."

Genesis did not respond to a request for comment. ®

Updated to add

"The NYAG told us for the first time late yesterday that it intended to file a lawsuit against the Genesis debtor entities and others. While there is no basis for the NYAG’s claims against Genesis, we have been cooperating with all authorities and intend to continue doing so," a spokesperson told The Register.

"With its rush to file this lawsuit, the NYAG has risked significant harm to Genesis’s creditors for the reasons we have explained to the NYAG on multiple occasions, including in a letter we sent to the NYAG last night. Genesis has not violated the law and continues to focus on maximizing recoveries for creditors in its Chapter 11 cases."


More about


Send us news

Other stories you might like