The New York Attorney General Raises Fraud Claims Against Digital Currency Group

The New York Attorney General Raises Fraud Claims Against Digital Currency Group

The New York Attorney General’s Office (NYAG) has recently increased its fraud claims against Digital Currency Group (DCG) and related parties. The lawsuit, which was originally filed with allegations of over $1 billion in losses, has now been amended to include an additional $2 billion in losses, bringing the total to a staggering $3 billion. These losses are said to have affected more than 230,000 investors, revealing a widespread fraudulent scheme that has been concealed for far too long.

New York Attorney General Letitia James expressed her disappointment, 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.” These accusations and subsequent revelations have led to the amended complaint being filed against Digital Currency Group, DCG CEO Barry Silbert, DCG subsidiary Genesis Global Capital, and former Genesis CEO Soichiro Moro.

While it was previously reported that Genesis had settled the NYAG lawsuit based on bankruptcy filings, the recent update from the Attorney General’s office does not mention any settlement. It remains unclear whether any alleged agreement would apply to the increased claim of $2 billion. This lack of clarity creates a sense of uncertainty and leaves investors wondering what the future holds in terms of their financial losses.

The New York Attorney General’s office initially initiated the lawsuit against DCG, Genesis, and their independent partner Gemini in October 2023. The case revolves around the offering of an interest-bearing crypto lending service called Gemini Earn. Although Gemini advertised it as a low-risk product, the NYAG’s investigation found that the company’s financial situation posed significant risks. It is alleged that Genesis and DCG executives tried to conceal their losses by entering a $1.1 billion promissory note between the two companies. This promissory note was intended to repay the losses over a ten-year period, effectively hiding the extent of the fraudulent activity.

The Securities and Exchange Commission (SEC) has also taken action against Genesis, adding more weight to the allegations against the company. In a conditional settlement, Genesis agreed to pay $21 million, but this will only come into effect if the company fails to provide full compensation to its customers through the ongoing bankruptcy proceedings. This involvement of the SEC further highlights the severity of the situation and the need for thorough investigation and accountability.

The fraud claims against Digital Currency Group, its CEO, subsidiary, and former CEO have intensified, with the NYAG amending its complaint to include an additional $2 billion in losses. The alleged scheme to defraud investors and the public has caused widespread harm, affecting over 230,000 investors. The lack of clarity regarding settlements and the involvement of the SEC points to a complex legal battle that is far from over. It is crucial that the truth is uncovered and justice is served to restore the trust of investors and protect the integrity of the cryptocurrency industry.


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