Key takeaways:
- The Attorney General of New York has broadened the scope of her civil fraud case against DCG, alleging the company is accountable for $3B in investor losses.
- According to the attorney general, up to 230,000 people may have lost up to $3 billion, prompting the lawsuit to be expanded in the New York Supreme Court.
Attorney General Letitia James of New York has expanded the scope of her civil fraud prosecution against Digital Currency Group (DCG), claiming in a recent court document that the business has responsibility for $3 billion in investor losses connected to the Gemini Earn product and to direct investments with Genesis.
According to claims in a $1 billion fraud lawsuit filed in October against DCG, its now-defunct lending platform Genesis, and Gemini Trust, these companies are accused of deceiving investors and promising them the security of their money while their management knew that the end was drawing near.
The fraud case initially concentrated on the Gemini Earn investment program that Genesis and Gemini jointly operated, but following the lawsuit, according to James’ office, other investors complained that Genesis had deceived them more directly.
According to the attorney general, up to 230,000 people may have lost up to $3 billion, prompting the lawsuit to be expanded in the New York Supreme Court on Friday. James stated in a statement:
“The fraud and deceit were so expansive that many additional people have come forward to report similar harm,”
According to James, this illicit cryptocurrency scheme and the catastrophic financial losses that actual people have experienced serve as yet another reminder of the need for stricter cryptocurrency laws to safeguard all investors.
In response, the company said on Friday that the AG was only trying to make headlines.
Two months after Gemini Earn users’ withdrawals were stopped due to the failure of Sam Bankman-Fried’s FTX cryptocurrency exchange, Genesis declared bankruptcy in January 2023.
The US Securities and Exchange Commission (SEC) also filed lawsuits against Genesis and Gemini, claiming they disregarded disclosure obligations designed to safeguard Gemini Earn clients.
Genesis consented to pay the SEC a $21 million punishment last week as long as it could completely reimburse consumers through bankruptcy. Meanwhile, DCG’s failure in their crypto lending relationship has led Gemini to file a lawsuit against them.
The Winklevoss twins gained widespread recognition after appearing in the Facebook creation documentary The Social Network. They met Mark Zuckerberg while attending Harvard University. They went on to sue Zuckerberg, saying that he had stolen their idea for a website they were going to call Harvard Connection, but he went on to call it Facebook.
Letitia James is awaiting the verdict in the fraud trial she instigated against Donald Trump and his conglomerate, the Trump Organization, in New York.
