Recent York Attorney General Letitia James on Friday expanded her lawsuit against Digital Currency Group and other cryptocurrency defendants, tripling the scale of their alleged fraud scheme to greater than $3 billion.
James in October sued Digital Currency, its Genesis Global Capital unit, and Gemini Capital, the exchange run by twin brothers Cameron and Tyler Winklevoss.
She claimed they caused greater than $1 billion of losses by misleading investors about the Gemini Earn program, which let customers lend crypto assets to Genesis in exchange for a high rate of return.
The attorney general said it had grow to be clear as more investors got here forward that “the scam perpetrated by DCG through Genesis” also ensnared investors who sent money directly to Genesis and were falsely assured their money was secure.
James is looking for greater than $3 billion of restitution for the greater than 230,000 investors who she believes were defrauded.
“This illegal cryptocurrency scheme, and the horrific financial losses that real people have suffered, are yet one more reminder of why stronger cryptocurrency regulations are needed to protect all investors,” James said in an announcement.
DCG said Friday that James’ lawsuit was “baseless” and that it expects to win in court.
“DCG has all the time conducted its business lawfully and with integrity, and DCG and Barry Silbert shall be fully vindicated,” it said in an announcement.
Genesis is shutting down after filing for bankruptcy in January 2023.
Late Thursday, it reached a settlement with James’ office, agreeing to pay on her fraud claims as long as it fully repays customers through the Chapter 11 process. That settlement requires a bankruptcy judge’s approval.
Representatives for DCG and Gemini didn’t immediately respond to requests for comment.
Silbert, who’s DCG’s chief executive, and Soichiro Moro, a former Genesis chief executive, are also defendants.
Genesis filed for bankruptcy two months after halting withdrawals by Gemini Earn customers following the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange.
Each Genesis and Gemini were also sued by the Securities and Exchange Commission, which said they bypassed disclosure requirements meant to protect Gemini Earn customers.
Last week, Genesis agreed to pay the SEC a $21 million positive, also contingent on its repaying customers first. Gemini, meanwhile, has sued DCG over their failure of their crypto lending partnership.