In a lawsuit filed in Manhattan on Thursday, New York state prosecutors said that cryptocurrency firms Digital Currency Group and Gemini scammed more than 230,000 investors out of a total of $1.1 billion. They listed a number of mistakes, including one in which the risk of exposure to Sam Bankman-Fried’s allegedly fraudulent and insolvent crypto trading firm was not properly managed.
Prosecutors claimed that in order to carry out the alleged fraud, Digital Currency Group and its affiliates and companies, such as Genesis Global Capital and Genesis, misled investors, produced fake financial records, and withheld information from creditors.
Barry Silbert’s empire previously had Genesis as its centrepiece. It functioned as an over-the-counter trading desk, prime brokerage, and lender that obtained cryptocurrency from its clients and lent it to other parties while earning money from the interest it charged them. It was extremely profitable for a while, but then crypto hedge fund Three Arrows Capital stopped making payments on its loans, throwing much of the cryptocurrency market into chaos.
Source (CNBC)