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NY attorney general expands crypto lawsuit, sees $3 billion fraud

New York Attorney General Letitia James watches as former US President Donald Trump attends the Trump Organization civil fraud trial, at the New York State Supreme Court in the Manhattan borough of New York City, USA USA, on October 24, 2023.

Cool Mike | Reuters

New York Attorney General Letitia James on Friday expanded her lawsuit against Digital Currency Group and other cryptocurrency defendants, tripling the size of their alleged fraud scheme to more than $3 billion.

In October, James had sued DCG, its Genesis Global Capital unit and Gemini Trust, the exchange run by twin brothers Cameron and Tyler Winklevoss.

He claimed they caused more than $1 billion in losses by misleading investors about the Gemini Earn program, which allowed customers to lend crypto assets to Genesis in exchange for a high rate of return.

The attorney general said it had become clear as more investors came forward that “the scam perpetrated by DCG through Genesis” also ensnared investors who sent money directly to Genesis and were falsely assured their money was safe.

James is seeking more than $3 billion in restitution for the more than 230,000 investors he believes were defrauded.

“This illegal cryptocurrency scheme and the horrific financial losses that real people have suffered are another reminder of why stricter cryptocurrency regulations are needed to protect all investors,” James said in a statement.

Representatives for DCG, Genesis and Gemini did not immediately respond to requests for comment.

Barry Silbert, CEO of DCG, and Soichiro Moro, former CEO of Genesis, are also charged.

Genesis filed for bankruptcy in January 2023, two months after stopping Gemini Earn customer withdrawals following the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange.

Both Genesis and Gemini were also sued by the U.S. Securities and Exchange Commission, which said they skirted disclosure requirements meant to protect Gemini Earn customers.

Last week, Genesis agreed to pay the SEC a $21 million fine, provided it can fully pay customers through the bankruptcy process. Meanwhile, Gemini has sued DCG over the failure of its crypto lending partnership.



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