The New York Attorney General’s Office Raises Fraud Claims Against Digital Currency Group, Resulting in $3 Billion in Losses

The New York Attorney General’s Office Raises Fraud Claims Against Digital Currency Group, Resulting in $3 Billion in Losses

The New York Attorney General’s Office (NYAG) has recently expanded its fraud claims against Digital Currency Group (DCG) and its affiliates, asserting that the losses incurred now amount to a staggering $3 billion. The lawsuit, which initially alleged losses of over $1 billion, has been amended to include an additional $2 billion in losses, affecting more than 230,000 investors in total. These new claims highlight the extent to which DCG is accused of deceiving and defrauding investors.

New York Attorney General Letitia James exposed DCG’s deceitful practices, 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 fraud and deceit were so expansive that many additional people have come forward to report similar harm.” This revelation emphasizes the grave nature of the allegations against DCG and its subsidiaries.

The amended complaint, filed by the NYAG, targets Digital Currency Group, CEO Barry Silbert, DCG subsidiary Genesis Global Capital, and former Genesis CEO Soichiro Moro. The NYAG explicitly mentions that the revised complaint is a direct result of investors stepping forward with their grievances. Although Bloomberg previously reported that Genesis had settled the NYAG lawsuit, based on bankruptcy filings, the recent update from the NYAG does not mention any settlement. Therefore, it remains uncertain whether any potential agreement would encompass the newly claimed losses.

The NYAG initially initiated the lawsuit in October 2023, focusing on DCG, Genesis, and their partner Gemini, for the promotion of Gemini Earn—a cryptocurrency lending service that advertised itself as low-risk. However, the NYAG discovered that the financial stability of the company carried significant risks. The lawsuit alleges that Genesis and DCG executives attempted to conceal losses by entering into a $1.1 billion promissory note, outlining a repayment plan over a ten-year period between the two entities. According to the NYAG, this promissory note and the overall attempt to hide losses were part of a broader scheme to defraud investors and the public.

In addition to the NYAG lawsuit, the Securities and Exchange Commission (SEC) has taken action against Genesis. As a result, a conditional settlement of $21 million has been reached, contingent upon Genesis’ ability to fully compensate customers through its ongoing bankruptcy proceedings. This development further emphasizes the seriousness of the allegations against Genesis and its role in the fraudulent practices that have affected numerous investors.

The expanded fraud claims brought by the New York Attorney General’s Office against Digital Currency Group and its affiliates have revealed a staggering total of $3 billion in losses. The amended lawsuit highlights the extent of the alleged deception and fraud perpetrated by DCG executives, with the NYAG emphasizing the magnitude of the harm caused to numerous investors. With ongoing legal proceedings and potential settlements in question, the consequences for DCG, Genesis, and their associated parties remain uncertain. The pursuit of justice in this case serves as a reminder of the importance of transparency and accountability within the cryptocurrency industry.

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