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The Courts

New York Sues Crypto Firms For Losing Over $1 Billion (theverge.com) 50

Posted by msmash from the better-late-than-never dept.
New York Attorney General Letitia James is suing three cryptocurrency companies -- Gemini, Genesis, and Digital Currency Group (DCG) -- over claims they misled investors, leading to the loss of over $1 billion. From a report: In a lawsuit filed on Thursday, James says their alleged fraudulent schemes affected over 230,000 investors. The lawsuit targets Gemini, the crypto exchange owned by Cameron and Tyler Winklevoss, and its Earn program. The firm marketed Gemini Earn as a high-yield program that involved customers investing with Genesis Global Capital, which is owned by DCG. However, James alleges that Gemini knew investing with Genesis was risky and misled customers as a result.
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New York Sues Crypto Firms For Losing Over $1 Billion More

New York Sues Crypto Firms For Losing Over $1 Billion

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  • Well don't do that... (Score:5, Insightful)

    by Petersko ( 564140 ) on Thursday October 19, 2023 @02:31PM (#63937545)

    If you take away their ability to mislead investors, you are creating an existential crisis for them. Imagine if honesty about risk was enforced in the speculative markets. Chaos, I tell you. Unmanageable chaos. The money must continue to flow through the funnels. If there are to be wolves, you must have sheep.

    • Oh, I dunno... I took a huge step recently and engaged a financial advisor. We had more discussions about risk than about any other specific topic, including taxes and my expectations.

      Risk may be something the unscrupulous and criminal would mis-state, minimize, and mislead, but that's hardly unique to financial industry, and is only one of the underpinnings of the brokerage industry. Only one. Your assertions would be useful to those who intend to take control of the business, as regulators, and so dictate

    • Perhaps New York wants to push Wall Street out. Then they can blame their slow deterioration on "white banker flight", similar to Detroit.

  • Crypto isn't an investment (Score:4, Insightful)

    by TomR teh Pirate ( 1554037 ) on Thursday October 19, 2023 @02:41PM (#63937565)
    It's a ponzi scheme. Nothing of material value is created by crypto, people are merely betting they are smarter than the next guy who comes along and buys it at a higher price using actual dollars. Unlike a company that makes CPUs, produces fossil fuels, writes software, provides tangible services, etc., crypto is purely an abstract of greed dressed up like it's a real product. It's not. Nobody should feel sympathy for the greedy folks who lose money "investing" in a money-stealing endeavor.

    • Re: (Score:3, Insightful)

      by boulat ( 216724 )

      Never invested in crypto, never will.

      Good to see others losing money though.

    • Re: (Score:3)

      by gweihir ( 88907 )

      Yes, obviously. But watch all the people aggressively claiming it is not so (including here) and you see the real problem: People being deeply in denial about reality.

      • Yes, obviously. But watch all the people aggressively claiming it is not so (including here) and you see the real problem: People being deeply in denial about reality.

        Well, if you already own cryptocurrency you have every motivation to extol its virtues. And get as much in the way of hard currency from those willing to give it to you for your cryptocurrency.

        • Re: (Score:2)

          by gweihir ( 88907 )

          So you say many of those that sing the praise of crypto-"currencies" are stupid and scum? Makes sense to me.

        • As bad as crytpo is, hard currency should be banned as it is misleading. Have you heard of inflation?
          • What are you claiming?
            • If you don't know what inflation is you need to head back to school. currency is about as hard as as jello, slight resistance to change but will bend with the pressures of money printing (aka tax.)
              • So you're claiming that because you sometimes call money "hard currency" it's no more legitimate than crypto?
                Why are you suddenly up in arms about inflation? We've often had inflation. Inflation is part of our economic cycles.
                If you weren't aware of that you should head back to school.
                • Oh a funny guy. Sometimes have inflation? Please tell me 1 year of the last 50 when there was no inflation?

                  Just keep believing and trusting, your friendly government would not steer you wrong. Yellen is totally competent and you can trust her too.
              • Comment removed based on user account deletion

    • If you buy a stock that doesb't yield dividend then you aren't investing in a company. That company recieved thier investment when the stock was first issued, by the time you pick it up on eTrade or whatver it has passed through several hands. You are hedging that a company will return to ask for another round of stock or the conpany decides to do a buy back, and your shares value will mean sonething then.

      • If you are investing in a typical companyâ(TM)s shares you are financing its economic activity. Companies create goods and services which their customers pay for, and which provide profits. While some companies may not be paying dividends for a while, there is an expectation that they will eventually pay dividends and / or buy back stock using money generated from their business activities (as opposed to holding that someone comes to buy you out).

        Therefore investing in the stock market is completely di

      • Comment removed based on user account deletion

        • Re: (Score:2)

          by BranMan ( 29917 )

          Dividends are irrelevant. If you buy stock in a company you own a piece of that company. Literally. That's what having stock means.

          You are also investing in that company - even if indirectly. Your shares were, at some point in the past, issued by the company (i.e. they got paid for them). You are taking over that original buyer's investment in that company. Maybe the valuation has changed in the meantime - that doesn't matter. You are making an investment, and you own a piece of them.

          • Comment removed based on user account deletion

            • Re: (Score:2)

              by BranMan ( 29917 )

              Very true also - but you are, in fact, taking over the original investment. Forget stocks - you start a company and have 2 backers with 30% equity each. Both of them sell - for $1, or $1,000,000, doesn't matter - to a 3rd party. Well, guess what - that 3rd party has 60% equity in your company (and you'd better listen to them, for better or worse). But, yeah - the company got money from the first 2 guys, and nothing more from the third.

      • Agreed. It very much feels like the wealth of the US economy is built on good feelings and not structural soundness.

    • It's a ponzi scheme. Nothing of material value is created by crypto...

      OK, valuing damn near any non-backed and unaudited (cough, the Fed) currency can be an exercise dancing between fiscal uncertainty and new math, but can we dispel with this delusion that cryptocurrency hasn't created anything of material value already? Plenty of mansions, yachts, real estate, cocaine and lambos painted in fuck-boy fuschia were purchased from just the exchange between that globally accepted ponzi scheme and every other fiat currency used to buy all that material in existence today. That ma

      • Re: (Score:2)

        by vakuona ( 788200 )

        Crypto is zero sum, or maybe even negative sum.

        While it may have created some value, it isn't in what folks would normally refer to. Examples of the value that crypto creates is:
          - Ability (for a while at least) to trade illicitly online while being (allegedly) untraceable
          - Ability to evade taxes and exchange control

        Crypto has been wholly sustained by the increase in the price, or the expectation of it.

        • While it may have created some value, it isn't in what folks would normally refer to...

          So, when Warren Buffet takes BH investors through the roof with million percent returns over time, the mansions, yachts, and fuck-boy lambos are referred to as "some value"..

          ..but when someone does the same thing with an investment called "crypto", they have a different name for all those mansions, yachts, and fuck-boy lambos? What do they refer to those as?

          Crypto has been wholly sustained by the increase in the price, or the expectation of it.

          Gee, I can't imagine what speculative-predictin' short-grabbin' IPO-runnin' CDO-gamblin' money-snatchin' insider-tradin' Too-Big-to-be-failin' Street th

          • Comment removed based on user account deletion

          • Re: (Score:2)

            by vakuona ( 788200 )

            While it may have created some value, it isn't in what folks would normally refer to...

            So, when Warren Buffet takes BH investors through the roof with million percent returns over time, the mansions, yachts, and fuck-boy lambos are referred to as "some value".. ..but when someone does the same thing with an investment called "crypto", they have a different name for all those mansions, yachts, and fuck-boy lambos? What do they refer to those as?

            BH investors are investing in underlying companies that actually generate economic activity / output. For example, BH owns:
            - Acme Brick Company
            - Clayton Homes, that builds actual houses
            - GEICO insurance

            Their profits are generated in the old fashioned way, customers pay them more than the cost of providing goods and service, and that activity is what sustains BH shares. While BH does not pay a dividend, they could if they wanted to.

    • You're describing the Greater Fool theory. An important, sometimes foundational, basis for much of the collectible industry, and perhaps also in real estate. Amon g others. Caveat Emptor -always-.

  • Lose a billion and they sue you.. (Score:5, Funny)

    by Rujiel ( 1632063 ) on Thursday October 19, 2023 @03:17PM (#63937661)
    Lose a trillion and they look the other way.

  • I've had worse.

  • that these companies could possible pay it back in any way, shape, or form? No. That money is gone. Poof. Just like everything else in the crypto world - there is no value.

  • "High yield program"... (Score:4, Insightful)

    by gweihir ( 88907 ) on Thursday October 19, 2023 @03:38PM (#63937707)

    People continue to be utterly stupid and believe fantastic interest rates or financial gains on "investments" can be real and come with low risk...

    This must be one of the oldest scams of modern times.

    • People continue to be utterly stupid and believe fantastic interest rates or financial gains on "investments" can be real and come with low risk...

      This must be one of the oldest scams of modern times.

      This is one of the oldest scams that's still functioning about as well as the rest of the house of cards offering obscenely low interest rates. Somewhere between Too Big To Fail and a Fed audit lies a digital QE printing press that's reportedly worth more than an entire collection of Hunter Biden fine art.

      • QE is over, and rates are up. Last I looked 10 & 30 yr treasuring are yielding right at 5% I will not be surprised if they hit 5.5 before they settle in for a couple years at those rates.

  • Didn't Investors Know It Was Risky (Score:3)

    by jvkjvk ( 102057 ) on Thursday October 19, 2023 @03:41PM (#63937719)

    I'm sure that there was some indication that they could lose money, yes?

    I'm sure that any "it's too good to be true" thoughts that the investors had were stifled behind the $GREED signs in their eyes.

    Did none of the investors do any due diligence? Is it *that* easy to convince people that you have money? Just present them with pieces of paper, or e-forms, that state so? Hmm.

    Shouldn't you be investing in things that you know about, at least in a broad sense? I mean, I know the stock market may go down, so I invest in a retirement mutual fund with low fees so that my risk is the risk for the whole economy, in general. I know the markets are regulated to the extent that I *do* have those shares, and they *can't* be taken from me or sold out from under me, nor can the liquid funds in those Investment Houses. It can all go to 0, but that disaster wouldn't be affecting just me, and there's nothing I can/could do against that. Yes, the mutual funds may invest in sketchy investments, but then I have to pick one that doesn't do that. Like, I don't want my retirement fund investing in Crypto. No thanks.

    Perhaps these people just had too much money. People with too much money aren't generally as careful with it as people with less money, and fall for schemes which may net them even more too much money regularly. Maybe that's why they invested in such a sketchy product.

  • Wow (Score:3)

    by gosso920 ( 6330142 ) on Thursday October 19, 2023 @04:35PM (#63937873)
    So, how much did she lose on that craptocoin scam?
  • People like myself have been calling out crypto as a Ponzi scheme for years. There is money to be made in a Ponzi scheme, but you have to get your timing just right, so it's gambling unless you have insider knowledge. That said, there was no shortage information available how crypto is a pyramid scheme. Those who chose to ignore it, deserve to pay for their "bravery" (insert Matt Damon crypto ad here - "fortune favors the brave"). https://www.youtube.com/watch?... [youtube.com]

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