The New York Attorney General’s Office (NYAG) recently escalated its fraud claims against Digital Currency Group (DCG) and affiliated parties. The lawsuit, originally alleging over $1 billion in losses, has been amended to include an additional $2 billion in losses, bringing the total to $3 billion. Allegedly, more than 230,000 investors have been affected by this fraud.
New York Attorney General Letitia James expressed her disappointment, stating, “After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions.” The scope of the fraud and deceit was so vast that numerous additional individuals have come forward to report similar harm.
The amended complaint has been filed against Digital Currency Group, DCG CEO Barry Silbert, DCG subsidiary Genesis Global Capital, and former Genesis CEO Soichiro Moro. The NYAG explicitly mentioned that the amended complaint was the result of investors stepping forward. Previously, it was reported that Genesis had settled the NYAG lawsuit based on bankruptcy filings, but the recent update from NYAG does not mention any settlement. It remains unclear if any supposed agreement would cover the increased amount.
The New York Attorney General’s office launched the lawsuit against DCG, Genesis, and their independent partner Gemini in October 2023. The case primarily focused on Gemini Earn, an interest-bearing crypto lending service advertised as a low-risk product. However, the NYAG discovered significant financial risk associated with Gemini’s operations.
According to the NYAG, Genesis and DCG executives attempted to conceal losses by issuing a $1.1 billion promissory note promising repayment over a decade between the two companies. The NYAG characterized this promissory note and the concealment of losses as part of a scheme to defraud investors and the public.
In addition to NYAG’s actions, the Securities and Exchange Commission (SEC) has also taken legal action against Genesis. As a result, a conditional settlement of $21 million has been proposed. However, Genesis will only be required to pay this amount if it cannot fully compensate its customers through its ongoing bankruptcy proceedings.
The NYAG’s decision to amend the lawsuit against Digital Currency Group and related parties underscores the severity of the alleged fraud. With the inclusion of $2 billion in additional losses, the total amount reaches a staggering $3 billion. As the legal proceedings unfold, both NYAG and SEC continue to hold the responsible parties accountable for their actions, seeking justice for the affected investors.
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