New York AG Raises Fraud Charges to $3 Billion in Digital Currency Group Lawsuit
The New York Attorney General, Letitia James, who is pursuing over $1.1 billion worth of fraud charges against Digital Currency Group, has now augmented the value of the fraud to $3 billion after more investors came forward with information that they have also been duped by false promises and tricked into investing in projects of DCG.
$3 Billion Crypto Fraud Lawsuit Against Digital Currency Group
The amended lawsuit against the crypto firm Gemini and Digital Currency Group now claims that the firm has duped a quarter of a million investors and the total amount is now three times the earlier amount of $1.1 billion.
The first suit was filed against Genesis and its former CEO Soichiro Moro, its parent company, DCG (Digital Currency Group), and DCG’s CEO Barry Silbert in October 2023 for defrauding the investors and concealing losses of $1.1 billion, which investors eventually bore.
However, now the amount is revised after more investors reported that they had also been victims of the fraud.
New York Attorney General Letitia James on friday session said that after many months of investigation, the full extent of the fraud was revealed and that DCG was consistently lying to the investors.
The lawsuit also revealed details of the failed partnership between Gemini and DCG unit Genesis on the former’s Earn interest-bearing product.
Post the FTX collapse, Genesis halted the withdrawals and the investors’ assets were frozen in 2022. The lawsuit alleges that Gemini has continuously lied to the investors and led them to believe that investing in Genesis through the program was a low-risk investment while, as per the internal analysis, it was a risky financial venture.
The company was aware that Genesis loans were undersecured and it was like putting too many eggs in a single basket. Most of the investment was made in Sam Bankman-Fried’s Alameda, but did not reveal this information to investors.
After suffering substantial losses to the tune of $1.1 billion, the top bosses of Genesis, DCG, and their executives concealed the losses by effecting a $1.1 billion promissory note. It required Digital Currency Group to pay Genesis $1.1 billion in 10 years at an interest rate of 1%.
The lawsuit charged Digital Currency Group through Genesis of defrauding the investors by issuing promissory notes and concealing the real state of Genesis’ financial health and its ability to continue operations.
The lawsuit in its first sheet focused on the Gemini Earn investment program that Genesis and Gemini ran together. However, now the lawsuit is amended after more investors came forward with the revelation that they were tricked by Genesis more directly.
According to NY AG’s statement in court on friday, As of now, it is estimated that 230,000 people lost as much as $3 billion.
“This illegal cryptocurrency scheme, and the horrific financial losses that real people have suffered, are yet another reminder of why stronger cryptocurrency regulations are needed to protect all investors,”
James said on Friday.
On its part, the company has also responded and said that Letitia James is playing for the headlines.
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