The suit relates to a failed partnership between Gemini and DCG unit Genesis on the former's Earn interest-bearing product. Last year, customer assets were frozen after Genesis halted withdrawals following the FTX collapse.

The suit alleges that Gemini lied to investors about Earn, repeatedly assuring customers that investing with Genesis through the programme was low-risk investment despite the fact that its own internal analyses showed that the company’s financials were risky.

The lawsuit alleges that Gemini knew Genesis’ loans were undersecured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors.

Genesis and its former CEO Soichiro Moro, its parent company, DCG, and DCG’s CEO Barry Silbert are charged with defrauding investors and the public by trying to conceal more than $1.1 billion in losses, which were borne by investors.

Attorney General James is seeking to ban Gemini, Genesis, and DCG from the financial investment industry in New York, and get restitution for investors and disgorgement of ill-gotten gains.

Says James. “Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn. Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses."

In January, the SEC charged both Genesis and Gemini with offering and selling unregistered securities over the Earn product - which was ended earlier that month.

Since then, Gemini has filed suit against DCG and Silbert alleging “fraud and deception” and seeking to recover “damages and losses” related to the partnership. Meanwhile, Genesis, which has filed for bankruptcy, has sued parent DCG in an effort to recover $620 million in outstanding loans.