Winklevoss’ crypto firm lied to customers about junk investments, NY AG says

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Winklevoss’ crypto firm lied to customers about junk investments, NY AG says
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Gemini’s board was warned that loan partner Genesis was a Lehman Brothers waiting to happen, but told customers their money was safe, AG says.

As the storm clouds were gathering around the crypto industry in the summer of 2022, members of the board for Gemini, the crypto exchange founded by twin brothers Tyler Winklevoss and Cameron Winklevoss, gathered to discuss their partnership with Barry Silbert’s crypto-lending business Genesis Capital.

One of Gemini’s board members “compared Genesis Capital’s debt-to-equity ratio to that of Lehman Brothers prior to its collapse,” according to a lawsuit filed Thursday by New York State Attorney General Letitia James, alleging that the entire basis of the Gemini-Genesis partnership was a fraud that cost 230,000 customers over $1 billion.

In November, Genesis would be forced to freeze all withdrawals shortly after the collapse of FTX, trapping around $1 billion in Gemini customer money in its wake. Genesis has since filed for bankruptcy protection and Bankman-Fried is currently on trial for fraud and faces decades behind bars if convicted.

The suit seeks full restitution for investors it says were defrauded plus a life-time bar against any of those involved from engaging in any business related to the purchase and sale of securities and commodities within or from New York. The New York attorney general’s suit was not filed against Tyler and Cameron Winklevoss personally or accuse them of wrongdoing.

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