NYAG Sues Gemini-Genesis-DCG

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Good Morning. The crypto markets are up, with Bitcoin inching closer to $30,000, despite the recent NYAG charges against Gemini-Genesis-DCG. But hey, it might be a sign that the bottom is nearing when the market is no longer perplexed by more negative news.

In Today's Email:

• What Matters: NYAG sues Gemini-DCG-Genesis ⚖️

• Founders Highlight: Philipp Zentner of LIFI 👨‍💻

• Deal Flows: SynFutures $22M Series B 💰

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WHAT MATTERS

NYAG Sues Gemini, Genesis, DCG

State of play: NYAG filed a complaint against Gemini, Genesis, DCG, Michael Moro, and Barry Silbert, accusing them of defrauding over 230,000 investors, including 29,000 New Yorkers, of $1 billion+.

• Gemini lent funds to Genesis in its Earn program. Defaults after multiple bankruptcies left Genesis with a $1B deficit. DCG claimed to cover the losses but only issued a promissory note to Genesis.

• DCG, Genesis, and the two executives allegedly concealed $1.1B in losses through misleading statements and omissions.

• The complaint seeks to ban the defendants from selling securities and commodities in New York and demands they pay damages, penalties, and forfeit profits from the activities.

The NYAG alleged that Gemini falsely stated Genesis' loans were overcollateralized, citing data from Dec 2020 to Sep 2022 that showed only 60-90% collateralization.

• This contradicted a Gemini press release in Feb 2021 claiming the loans were overcollateralized.

• The NYAG revealed that in May 2021, Gemini's team found Genesis to be highly leveraged with low liquidity.

• By February 2022, Gemini predicted a potential 50-60% default rate in a market downturn, equating their financials to a CCC credit rating, indicating a significant risk of default.

Why it matters: Letitia James also stated that the NYAG office will continue “to stop deceptive crypto companies and push for stronger regulations to protect all investors.”

For builders and investors: The failure of many crypto companies to self-police and protect investors might invite regulators to come and over-regulate the space without understanding the nuance.

BUILDER-INVESTOR HIGHLIGHT

Philipp Zentner, Founder & CEO of LI.FI

Philipp Zentner is the Founder and CEO of LI.FI, a bridge & DEX aggregator enabling seamless movement between positions on any chain.

He recently wrote a guide on fundraising.

Previous backgrounds: Philipp is a software developer at heart and has been building several online ventures since 2005 before founding LI.FI on 2021.

• He founded his first company called ‘cussit’ in 2008, it was a discussion platform. In 2010, he served as Winila CTO.

• In 2012, he founded STOMT, the first cloud-based, omnichannel platform for customer wishes.

• Philipp also co-founded Nucleostream in 2020, a biotech company.

• He studied Business Computing at Universität Passau and graduated in 2014.

The big idea: Phillipp and LI.FI believes that cross-chain bridging solutions will play a major role in the infrastructure level and aggregation will pave the way for mass adoption.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Alliance DAO’s Latest Accelerator Cohort

Alliance introduced six graduates from their recent All11 cohort during the demo day. Additionally, two alumni from its All10 cohort also presented on the demo day.

Here’s the list of the eight startups:

1. Kravatta, a Colombia-based platform linking TradFI and crypto for businesses entering web3 in Latin America.

2. Thunder, an on-chain “intent-based” trading terminal.

3. Sleepagotchi, a mobile game using NFTs to gamify sleep.

4. Blockcast, a decentralized content delivery network and marketplace.

5. Tailwind, a crypto wallet focused on the Cosmos ecosystem.

6. Tazz, a decentralized lending protocol.

7. Upshield, a full-stack security platform for web3 protocols, assets, and communities.

8. Inco, an encrypted EVM layer-1 protocol for on-chain dApp operation.

DEAL FLOWS

SynFutures $22M Series B

Deal flows remained consistent this week 📈 — we saw $50M+ in deals.

SynFutures, a DEX specializing in crypto perpetual futures trading, secured $22M in a Series B investment round.

• The investment round was led by Pantera Capital, with contributions from HashKey Capital, SIG DT Investments (a subsidiary of Susquehanna International Group), and other participants.

• Rachel Lin, co-founder and CEO of SynFutures, said that SynFutures is open to the idea of a native token launch in the future.

• SynFutures last raised a $14M Series A in June 2021.

Deal flows in the past week:

• Darewise, $3.5M Token Pre-Sale Round

• Coin Metrics, $6.7M Equity + Token Round

• FIleverse, $1.5M Pre-Seed Round

• Ryder, $1.2M Seed Round

• Beluga, $4M Seed Round.

• Myshell, $5.6M Seed Round

• Elixir Protocol, $7.5M Series A

• SynFutures, $22M Series B

• Squads, $5.7M Strategic Round

QUICK BITES

• NYAG sues Gemini, Genesis, and DCG.

• Coinbase to open source its Base L2 code.

• Binance US halts direct dollar withdrawals.

• California 'BitLicense' Bill signed by Gov. Newsom.

• SEC asks Judge to dismiss charges against Ripple CEO.

• Consensys employee sued Joseph Lubin over stock awards.

• ECB’s Digital Euro moves one step closer to becoming a reality.

• Grayscale submits a new filing to the SEC for a spot Bitcoin ETF.

• Coinbase rolled out perpetual trading for eligible non-US retail.

• The Inspector General said FDIC needs to prepare for crypto risks.

• US Treasury to designate crypto mixers as money-laundering hubs.

• JPMorgan expects spot bitcoin ETF approvals to come 'within months.'

NOTEWORTHY READS

• Paul Veradittakit’s read on onchain order book and AMM.

• Decentralised’s read on a new medium.

• Luca Prosperi’s read on NounsDAO’s natural demise.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.