Coindesk Logo

New York Expands Fraud Case Against Digital Currency Group to $3 Billion

New York Expands Fraud Case Against Digital Currency Group to $3 Billion

New York Expands Fraud Case Against Digital Currency Group to $3 Billion

An initial lawsuit accusing crypto firm DCG of cheating people out of $1 billion has been amplified by investors coming forward with losses tripling that, the NY attorney general said.

An initial lawsuit accusing crypto firm DCG of cheating people out of $1 billion has been amplified by investors coming forward with losses tripling that, the NY attorney general said.

An initial lawsuit accusing crypto firm DCG of cheating people out of $1 billion has been amplified by investors coming forward with losses tripling that, the NY attorney general said.

AccessTimeIconFeb 9, 2024, 5:46 PM
Updated Mar 8, 2024, 9:20 PM

CEO Barry Silbert's Digital Currency Group is now accused by the New York Attorney General of a much heftier $3 billion in investor losses in a lawsuit amended Friday. (CoinDesk)

10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now
  • New York Attorney General Letitia James now says Digital Currency Group and Gemini are responsible for $3 billion in investor losses, boosting the size of her fraud lawsuit tied to the defunct Gemini Earn program.
  • The companies are accused of misleading investors by assuring them their money was safe, when that, according to New York, was not the case.

New York Attorney General Letitia James has amplified its civil fraud case against Digital Currency Group (DCG), now saying the company is responsible for $3 billion in investor losses tied to the Gemini Earn product and to direct investments with Genesis, according to a new court filing.

As stated in an initial $1 billion fraud lawsuit against DCG, its defunct lending platform Genesis and Gemini Trust Co. in October, the companies are accused of misleading investors and assuring them of the safety of their money even as the companies' managements were aware that doom fast approached them. The fraud case focused at first on the Gemini Earn investment program that Genesis and Gemini ran together, but after the lawsuit, James' office said many more investors raised complaints of being swindled by Genesis more directly.

As many as 230,000 people lost as much as $3 billion, according to the attorney general, spurring Friday's expansion of the lawsuit in the New York Supreme Court.

"The fraud and deceit were so expansive that many additional people have come forward to report similar harm," James said in a statement. "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."

The company responded Friday by accusing the attorney general of playing for headlines.

“There is nothing new here," a DCG spokesperson said in an emailed statement, accusing the attorney general of making a "baseless complaint" to seek more press attention. "We will fight the claims aggressively and we will win. DCG has always conducted its business lawfully and with integrity, and DCG and Barry Silbert will be fully vindicated.”

UPDATE (February 9, 2024, 18:21 UTC): Adds DCG response.

Edited by Aoyon Ashraf.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.