New York Attorney General Letitia James increased the alleged fraud scheme amount against Digital Currency Group (DCG) and other cryptocurrency defendants to over $3 billion in her complaint on Friday.
James filed a lawsuit in October against Gemini Trust and DCG's Genesis Global Capital division, alleging that they misrepresented the Gemini Earn program, leading investors to lose more than $1 billion.
Over 230,000 investors were allegedly duped, including retail clients like a chiropractor and a stay-at-home parent who deposited $2 million in bitcoin with Genesis. James seeks compensation exceeding $3 billion, while DCG considers the case baseless and anticipates winning in court.
Letitia James, the attorney general of New York, tripled the amount of the alleged fraud scheme of Digital Currency Group and other cryptocurrency defendants in her complaint on Friday, bringing it to over $3 billion.
(Photo : by Jason Mendez/Getty Images for (BAM) Brooklyn Academy of Music )Letitia James, the attorney general of New York, tripled the amount of the alleged fraud scheme of Digital Currency Group and other cryptocurrency defendants in her complaint on Friday, bringing it to over $3 billion.
In October, James filed a lawsuit against Gemini Trust, the exchange managed by twin brothers Cameron and Tyler Winklevoss, and DCG, its Genesis Global Capital division.
She said that by misrepresenting the Gemini Earn program-which allowed users to lend cryptocurrency assets to Genesis in exchange for a high rate of return-they led investors to lose more than $1 billion.
As other investors came forward, according to the attorney general, it became evident that "the scam perpetrated by DCG through Genesis" also deceived investors who contributed money directly to Genesis under the false pretense that their funds were secure.
A chiropractor and a stay-at-home parent were among the many retail clients who deposited $2 million in bitcoin with Genesis, according to the lawsuit.
James claims that over 230,000 investors were duped, and she is requesting more than $3 billion in compensation.
James' case, according to DCG, is "baseless," and the company anticipates winning in court. Genesis filed into bankruptcy in January 2023 and is now closing.
It came to an agreement with James' office late on Thursday, paying for her fraud allegations as long as it reimburses consumers in full through the Chapter 11 procedure. The consent of a bankruptcy court is necessary for that arrangement.
Requests for response from DCG and Gemini representatives were not immediately answered.
Two other defendants are Soichiro Moro, the former CEO of Genesis, and Barry Silbert, the CEO of DCG.
Two months after Sam Bankman-Fried's FTX bitcoin exchange collapsed and Gemini Earn users' withdrawals were stopped, Genesis filed for bankruptcy.
The United States also filed lawsuits against Genesis and Gemini. The Securities and Exchange Commission said that they disregarded the disclosure guidelines intended to safeguard Gemini Earn clients.
Two other defendants are Soichiro Moro, the former CEO of Genesis, and Barry Silbert, the CEO of DCG.
Two months after Sam Bankman-Fried's FTX bitcoin exchange collapsed and Gemini Earn users' withdrawals were stopped, Genesis filed for bankruptcy.
The United States also filed lawsuits against Genesis and Gemini. The Securities and Exchange Commission said that they disregarded the disclosure guidelines intended to safeguard Gemini Earn clients.
Genesis consented last week to pay the SEC a $21 million fine, subject on Genesis paying back its clients first.
Meanwhile, DCG's failure in their crypto lending relationship has led Gemini to file a lawsuit against them.
