The Attorney General of New York, Letitia James, has lodged a legal action against crypto enterprises Gemini Trust Company, Genesis Global Capital, and their parent organization, Digital Currency Group (DCG). The companies are accused of defrauding over 230,000 investors, causing losses exceeding $1 billion. The lawsuit alleges that the firms misrepresented the risks associated with their lending scheme and attempted to hide losses of more than $1 billion from their investors.
Letitia James’ Lawsuit Seeks Recovery of Over $1 Billion in Losses
The most recent lawsuit by Letitia James revolves around an investment scheme known as "Gemini Earn." This program was rolled out in February 2021 as a collaborative effort between Gemini and Genesis. Gemini, a crypto exchange operator, reportedly marketed Genesis as a reliable lending associate for the Gemini Earn program. This program facilitated investors in earning interest by lending their crypto assets to Genesis.
Allegations of Misrepresentation and Concealment
However, the attorney general's probe unearthed that Gemini had misrepresented the risks linked to lending via Genesis. It continued to endorse the Earn program as "safe and secure," even after downgrading Genesis' credit rating to junk status internally. According to the lawsuit, Genesis attempted to cover up substantial losses surpassing $1.1 billion from defaulted loans following the downfall of Three Arrows Capital (3AC) in June 2022.
Impacts on Investors
"These cryptocurrency firms misled investors and sought to disguise over a billion dollars in losses, with middle-class investors bearing the brunt," stated James. She further elaborated that diligent New Yorkers and investors nationwide lost over a billion dollars due to being fed misleading information that their money would be secure and increase if they invested in Gemini Earn.
The purported fraud affected more than 230,000 investors globally, including a minimum of 29,000 New York inhabitants. The lawsuit draws attention to victims like a retired 73-year-old grandmother who lost her entire life savings of $199,000 invested in Gemini Earn. Another New Yorker reportedly lost $20,500, almost his entire savings, after believing Gemini's assertion that the program carried lower risk than other crypto lending alternatives.
NY AG James Seeks Permanent Prohibition and Restitution
James is striving to indefinitely prohibit the companies from offering securities or commodities in New York again. The lawsuit also seeks to secure restitution for defrauded investors and recover any earnings made through the alleged fraud. This lawsuit signifies the latest measure taken by James and her office to rein in the crypto industry amid escalating concerns about consumer protection and potential impropriety. Earlier in the year, she revealed legislation to heighten regulation of crypto assets in New York.
Settlements and Ongoing Risks
She has also secured multiple settlements from unregistered cryptocurrency firms like Coinex and Coin Cafe. The attorney general asserts that the alleged fraud by Gemini indicates the continuous risks posed by lack of regulation in the cryptocurrency sector. Gemini responded to the lawsuit on social platform X.
Gemini's Response to the Lawsuit
"The NY AG's lawsuit verifies what we've been asserting all along — that we, Earn users, and other creditors, are victims of a massive fraud and were systematically deceived about Genesis's financial state," stated Gemini. It added, "With that said, we completely disagree with the NY AG's decision to sue us as well. It's nonsensical to blame a victim for being defrauded and lied to, and we anticipate defending ourselves against this inconsistent position."
What are your thoughts on Letitia James' latest lawsuit against the three crypto giants? Share your views on this topic below.
Frequently Asked Questions
Is gold buying a good retirement option?
Although buying gold as an investment might not sound appealing at first, when you look at the average annual gold consumption worldwide, it is worth looking into.
The best form of investing is physical bullion, which is the most widely used. There are other ways to invest gold. It is best to research all options and make informed decisions based on your goals.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. If you are looking for cash flow from your investment, buying gold stocks will work well.
You also can put your money into exchange-traded funds (ETFs), which essentially give you exposure to the price of gold by holding gold-related securities instead of actual gold. These ETFs can include stocks of precious metals refiners and gold miners.
What is the best precious metal to invest in?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Gold is a traditional haven investment. However, it is not always the most profitable. For example, if your goal is to make quick money, gold may not suit you. If you have the patience to wait, then you might consider investing in silver.
If you're not looking to make quick money, gold is probably your best choice. However, silver might be a better option if you're looking for an investment that provides steady returns over long periods.
How much of your portfolio should be in precious metals?
Before we can answer this question, it is important to understand what precious metals actually are. Precious metals refer to elements with a very high value relative other commodities. This makes them valuable in investment and trading. The most traded precious metal is gold.
However, many other types of precious metals exist, including silver and platinum. While gold's price fluctuates during economic turmoil, it tends to remain relatively stable. It is also not affected by inflation and depression.
In general, prices for precious metals tend increase with the overall marketplace. That said, they do not always move in lockstep with each other. When the economy is in trouble, for example, gold prices tend to rise while other precious metals fall. Investors expect lower interest rates which makes bonds less appealing investments.
However, when an economy is strong, the reverse effect occurs. Investors prefer safe assets such as Treasury Bonds and demand fewer precious metals. They become less expensive and have a lower value because they are limited.
It is important to diversify your portfolio across precious metals in order to maximize your profit from precious metals investments. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.
How Much of Your IRA Should Be Made Up Of Precious Metals
When investing in precious metals, the most important thing to know is that they aren't just for wealthy people. It doesn't matter how rich you are to invest in precious metals. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You may consider buying physical coins such as bullion bars or rounds. Also, you could buy shares in companies producing precious metals. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
And, unlike traditional investments, their prices tend to rise over time. If you decide to sell your investment, you will likely make more than with traditional investments.
How much money should I put into my Roth IRA?
Roth IRAs are retirement accounts that allow you to withdraw your money tax-free. You cannot withdraw funds from these accounts until you reach 59 1/2. However, if your goal is to withdraw funds before that time, there are certain rules you must observe. First, your principal (the original deposit amount) cannot be touched. No matter how much money you contribute, you cannot take out more than was originally deposited to the account. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule is that you cannot withdraw your earnings without paying income taxes. Withdrawing your earnings will result in you paying taxes. For example, let's say that you contribute $5,000 to your Roth IRA every year. Let's also say that you earn $10,000 per annum after contributing. The federal income tax on your earnings would amount to $3,500. You would have $6,500 less. The amount you can withdraw is limited to the original contribution.
You would still owe tax on $1,500 if you took out $4,000 of your earnings. On top of that, you'd lose half of the earnings you had taken out because they would be taxed again at 50% (half of 40%). So even though your Roth IRA ended up having $7,000, you only got $4,000.
There are two types of Roth IRAs: Traditional and Roth. Traditional IRAs allow you to deduct pretax contributions from your taxable income. You can withdraw your contributions plus interest from your traditional IRA when you retire. There is no limit on how much you can withdraw from a traditional IRA.
Roth IRAs don't allow you deduct contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. Unlike a traditional IRA, there is no minimum withdrawal requirement. You don't need to wait until your 70 1/2 year old age before you can withdraw your contribution.
Statistics
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
External Links
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement plans
investopedia.com
irs.gov
finance.yahoo.com
How To
Investing gold vs. stocks
It might seem risky to invest in gold as an investment vehicle these days. This is because most people believe that it is no longer economically profitable to invest gold. This belief is due to the fact that many people see gold prices dropping because of the global economy. They feel that gold investment would cause them to lose money. There are many benefits to investing in gold. Below are some of them.
One of the oldest forms known of currency is gold. There are records of its use going back thousands of years. It was used all around the world as a reserve of value. Even today, countries such as South Africa continue to rely heavily on it as a form of payment for their citizens.
Consider the price per gram when you decide whether you should invest in or not. If you're interested in buying gold bullion, it is crucial that you decide how much per gram. You can always ask a local jeweler what the current market rate is if you don't have it.
It's worth noting, however, that while gold prices have fallen recently the cost of producing gold is on the rise. So, although gold prices have declined in recent years, the cost of producing it has not changed.
You should also consider the amount of your intended purchase when considering whether you should buy or not. It is sensible to avoid buying gold if you are only looking to cover the wedding rings. It is worth considering if you intend to use it for long-term investment. Selling your gold at a higher value than what you bought can help you make money.
We hope that this article has helped you gain a better understanding and appreciation for gold as an investment option. We recommend you do your research before making any final decisions. Only after doing so can you make an informed decision.
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By: Jamie Redman
Title: Major Cryptocurrency Firms Face $1B Fraud Lawsuit by NY Attorney General
Sourced From: news.bitcoin.com/gemini-genesis-dcg-face-1b-fraud-lawsuit-by-ny-attorney-general-gemini-says-its-the-victim-in-scandal/
Published Date: Thu, 19 Oct 2023 13:56:21 +0000
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