Three well-known cryptocurrency companies have been charged by US prosecutors with cheating investors out of almost $1 billion. Gemini, a cryptocurrency exchange, was accused by New York Attorney General Letitia James of misleading clients about the dangers of an investment account it provided that paid high interest rates on cryptocurrency.

The plan also included Genesis, a cryptocurrency lender, and Digital Currency Group, the company’s parent. Last November, it was stopped, preventing customers from accessing their money.

That occurred soon after FTX, the bitcoin exchange owned by Sam Bankman-Fried—who is already facing charges of fraud of his own—went down.

A few months later, Genesis, which had made large loans to his firms, declared bankruptcy.

Her case involved “another example of bad actors causing harm throughout the under-regulated cryptocurrency industry,” according to Attorney General James.

Gemini and Digital Currency Group (DCG) both declared they would contest the allegations.

“Honesty and integrity have always been my guiding principles,” said DCG founder Barry Silbert, calling the allegations “baseless”.

The latest legal action to result from the collapse of the cryptocurrency market last year is the one involving digital currencies.

The trio of businesses collaborated on Gemini Earn, a 2021 launch that let consumers lend cryptocurrency to Genesis in return for interest rates above 7%.

Prosecutors said in the lawsuit that Gemini knew from the beginning of the initiative that Genesis had questionable financial standing.

However, the lawsuit claimed that Gemini had vetted the company and neglected to warn clients about the risks associated with lending to it.

The risks escalated in June 2022 when Genesis suffered losses from the failure of another cryptocurrency company totaling over $1 billion.

Prosecutors stated that although publicly asserting that its balance sheet was robust, Genesis and DCG attempted to conceal the issue by financial manipulation and fabricated reports, including those given to Gemini.

Gemini, a cryptocurrency exchange started by the Winklevoss twins, who are well-known for alleging that their old Harvard roommate Mark Zuckerberg stole their idea to create Facebook, had already accused Genesis and DCG of fraud in relation to their attempts.

Gemini stated that the complaint supported its allegations against Genesis and that it also objected to being mentioned.

“Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position,” it said in a statement shared on social media.

However, the lawsuit claims that certain senior Gemini employees were so concerned in the summer of 2022 that they took money out of their own accounts.

“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result,” Attorney General James said.

She mentioned that among the 232,000 investors who fell victim to the purported swindle was a retired 73-year-old grandmother.

(Adapted from AOL.com)

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