New York now claims DCG lawsuit is a $3 billion crypto fraud case

The expanded lawsuit seeks more than $3 billion in restitution for defrauded investors.

New York Attorney General Letitia James escalated her legal battle against cryptocurrency giant Digital Currency Group (DCG), accusing the firm and its CEO Barry Silbert of defrauding investors out of an additional $2 billion.

This expansion brings the total alleged damages to a staggering $3 billion, impacting over 230,000 investors.

From misleading to defrauding investors

The amended lawsuit builds upon a previous complaint filed in October 2023, which accused DCG, its subsidiary Genesis Global Capital (Genesis), and cryptocurrency exchange Gemini Trust Company of misleading investors about the Gemini Earn program. That program, marketed as a low-risk investment, resulted in over $1 billion in losses.

Attorney General James alleges that DCG and Genesis engaged in a complex scheme to conceal their true financial condition. This included using a $1.1 billion promissory note to mask Genesis’ precarious financial situation and mislead investors about its ability to operate. Additionally, the investigation revealed further deceptive practices, including providing false assurances to investors about the safety of their funds.

“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” said Attorney General James in a statement. “The fraud and deceit were so expansive that many additional people have come forward to report similar harm.”

The expanded lawsuit seeks more than $3 billion in restitution for defrauded investors. It also highlights Attorney General James’ ongoing efforts to regulate the cryptocurrency industry and protect investors.

These efforts include announcing sweeping cryptocurrency legislation to increase regulations in New York; filing lawsuits against various crypto firms for fraud and deception; and issuing warnings and guidance to investors and the industry.

This latest development follows a growing trend of legal scrutiny towards the cryptocurrency industry. With concerns about investor protection and market volatility rising, regulatory oversight and enforcement actions will likely continue to increase in the coming months.

Whether DCG and its leadership will be held accountable for the alleged fraud remains to be seen. The legal battle promises to be complex and could have significant implications for the future of the cryptocurrency industry.