New York Attorney General Letitia James escalated her legal action against Digital Currency Group (DCG) and other cryptocurrency entities, expanding the lawsuit’s scope to over $3 billion. Initially filed in October, the lawsuit targeted DCG, its Genesis Global Capital unit, and Gemini Trust, alleging fraudulent practices.
James claims the defendants misled investors through the Gemini Earn program, resulting in over $1 billion in losses. The scheme attracted unsuspecting investors who were falsely assured of the safety of their investments. The lawsuit now includes more than 230,000 investors, seeking restitution for their losses.
DCG countered James’ claims, labeling the lawsuit as baseless and asserting its adherence to lawful business practices. Genesis, a subsidiary of DCG, has filed for bankruptcy, with a settlement reached with James’ office pending court approval. The settlement aims to repay defrauded customers through bankruptcy proceedings.
Barry Silbert, CEO of DCG, and Soichiro Moro, former Genesis CEO, are among the defendants. Genesis’ bankruptcy filing followed the suspension of withdrawals by Gemini Earn customers, linked to the collapse of the FTX cryptocurrency exchange.
The U.S. Securities and Exchange Commission (SEC) also took legal action against Genesis and Gemini, alleging violations of disclosure requirements. Genesis agreed to pay a $21 million fine to the SEC, contingent on customer reimbursements. Gemini has initiated legal action against DCG regarding their crypto lending partnership.
