New York Attorney General Letitia James has intensified her legal action against Digital Currency Group (DCG) and other cryptocurrency entities, expanding the alleged fraud scheme to over $3 billion. This move triples the initial size of the purported scam.
In October, James filed a lawsuit against DCG, including its Genesis Global Capital unit, and Gemini Trust, the exchange operated by Cameron and Tyler Winklevoss. The lawsuit accused them of causing losses exceeding $1 billion by misleading investors regarding the Gemini Earn program. This program allowed customers to lend crypto assets to Genesis in exchange for high returns.
As more investors came forward, James asserted that the deception extended to those who directly sent money to Genesis, falsely believing their funds were secure. The updated complaint highlights the inclusion of additional retail investors, such as a chiropractor and a stay-at-home father, each investing $2 million in bitcoin with Genesis.
The attorney general is now seeking restitution exceeding $3 billion for over 230,000 investors allegedly defrauded in the scheme. James emphasized the need for stronger cryptocurrency regulations to protect investors from such illicit activities.
A spokesperson for DCG dismissed the latest developments, labeling the complaint as baseless and emphasizing their commitment to lawful and ethical business practices. The spokesperson expressed confidence in their defense against the claims.
Genesis, in the midst of legal troubles, filed for bankruptcy in January 2023. A recent settlement with James' office, pending approval from a bankruptcy judge, requires Genesis to pay on fraud claims as long as it fully reimburses customers through the Chapter 11 process.
Gemini, on the other hand, has taken legal action against DCG over the failure of their crypto lending partnership. Both Genesis and Gemini faced lawsuits from the U.S. Securities and Exchange Commission (SEC) for allegedly bypassing disclosure requirements related to Gemini Earn.
While Genesis agreed to a $21 million fine with the SEC last week, contingent on repaying customers, the legal battle between Gemini and DCG continues. Representatives for DCG and Gemini have not yet responded to requests for comment, indicating the complexity and ongoing nature of the legal disputes in the cryptocurrency sector.