NYAG raises DCG, Genesis lawsuit to $3 billion amid conflicting settlement reports
The New York Attorney General’s Office (NYAG) filed fraud charges against Digital Currency Group (DCG) and related parties on February 9.
NYAG’s lawsuit originally claimed more than $1 billion in losses. However, it was revised to include an additional $2 billion in losses, bringing the total to $3 billion, reportedly affecting more than 230,000 investors in total.
New York State Attorney General Letitia James said:
“After months of false promises, we uncovered that DCG lied to investors and defrauded them of billions of dollars. The fraud and deception was so widespread that more people are reporting similar losses.”
NYAG said it had filed an amended complaint against Digital Currency Group, DCG CEO Barry Silverbert, DCG subsidiary Genesis Global Capital, and former Genesis CEO Soichiro Moro. The office explicitly stated that the amended complaint was the result of those investors coming forward.
Bloomberg previously reported that Genesis settled the NYAG lawsuit based on its bankruptcy filing. “The Debtor and NYAG have reached a resolution of the NY Litigation,” the Feb. 8 bankruptcy filing states.
However, NYAG’s latest update makes no mention of the settlement, and it is unclear whether any settlement will apply to the increased amount.
The NYAG lawsuit began in October.
The New York Attorney General’s Office first began filing the lawsuit in October 2023.
The case targeted DCG, Genesis and independent partner Gemini, which offers an interest-bearing cryptocurrency loan service called Gemini Earn. Although Gemini advertised Earn as a low-risk product, NYAG found that it posed significant risks to the company’s finances.
NYAG alleged that Genesis and DCG executives attempted to conceal their losses by entering into a $1.1 billion promissory note between the two companies promising repayment over 10 years.
According to NYAG, the promissory notes and attempts to conceal the losses were “part of a scheme to defraud investors and the public.”
The SEC also took action against Genesis. This resulted in Genesis paying a $21 million conditional settlement only if it was unable to fully compensate customers as part of the bankruptcy proceedings.