On February 9, 2024, the New York Attorney General (NYAG) filed an amended complaint in the Supreme Court of the State of New York, expanding its lawsuit against Digital Currency Group, Inc. (DCG), DCG CEO Barry Silbert, Genesis Global Capital, LLC, and former affiliate Soichiro Moro for alleged misrepresentations made to investors regarding a crypto investment program called Gemini Earn, which the NYAG has alleged caused more than $3 billion in losses.

The original action was filed against Gemini Trust Company (Gemini), Genesis, and DCG, which owns and operates the Genesis entities, in October 2023 (the original complaint had alleged $1 billion in losses for more than 230,000 investors, including at least 29,000 New York residents). The action was brought by the NYAG since all the entities were authorized to transact business in New York or maintained a principal office in New York County. On January 19, 2023, Genesis filed for bankruptcy in the United States District Court for the Southern District of New York (SDNY Bankruptcy Court) (see Bankruptcy: Cryptocurrency Case Tracker: Genesis Global Holdco, LLC).

In February 2021, Gemini, a cryptocurrency platform, and Genesis, a cryptocurrency lender, launched Gemini Earn, which was marketed as a high-yield investment program from which Gemini customers could profit by passively investing their cryptocurrencies with Genesis. To invest in Gemini Earn, investors first had to buy or hold cryptocurrency on Gemini's cryptocurrency platform. From February 2021 through November 2022, Gemini Earn investors invested billions of dollars in cryptocurrency in Genesis Capital, and Gemini earned more than $22 million in agent fees, plus more than $10 million in commissions when investors purchased cryptocurrency to invest in Gemini Earn.

On November 16, 2022, Genesis announced it was suspending all withdrawals from Gemini Earn, which left 232,000 investors with more than $1 billion in losses as a result of two distinct schemes:

The amended complaint reflects additional investors coming forward with losses. The amended complaint seeks more than $3 billion in restitution for more than 230,000 investors.

On February 8, 2024, Genesis filed a motion in the SDNY Bankruptcy Court to approve a settlement agreement between Gemini and the NYAG. The terms of the settlement dictate that NYAG will only receive payment if all general unsecured creditors in the Gensis bankruptcy case are first made whole. The settlement agreement does not specify the amount of the fine, but will allow NYAG to recover funds remaining after all of the general unsecured claims are paid.

The settlement would also permanently restrain and enjoin Genesis from directly or indirectly conducting or transacting business in the state of New York. The amended complaint filed on February 9, 2024, makes no mention of the settlement agreement between NYAG and Gemini.

On January 31, 2024, Genesis filed a settlement agreement in the SDNY Bankruptcy Court settling an SEC action over the unregistered offer and sale of securities through the Gemini Earn program (see Legal Update, SEC Charges Crypto Firms Genesis and Gemini with Unregistered Securities Offering for Crypto Lending Program). Under the terms of the settlement, the SEC will receive an allowed general unsecured claim against Genesis in the amount of $21 million to be paid after all other allowed administrative expenses, secured, priority, and general unsecured claims. Genesis did not admit or deny wrongdoing in the settlement agreement.

A hearing for both of settlement agreements was originally scheduled for February 14, 2024, but on February 13, 2024, the hearings were rescheduled for February 26, 2024.