In New York, Attorney General Letitia James made a big move on Friday. She widened her lawsuit against Digital Currency Group (DCG) and others involved in cryptocurrency. Now, she's saying their fraud scheme is worth more than $3 billion. Back in October, James sued DCG, Genesis Global Capital (a part of DCG), and Gemini Trust, which is run by Cameron and Tyler Winklevoss.
She says they caused over $1 billion in losses by tricking investors about the Gemini Earn program. This program let people lend their crypto assets to Genesis and get a high rate of return. But according to James, the truth is, it wasn't safe like they said. More investors came forward, and it became clear that many got caught in DCG's scam, thinking their money was safe when it wasn't.
The lawsuit mentions more retail investors who got deceived, like a chiropractor and a stay-at-home dad, each putting in $2 million worth of bitcoin. James wants over $3 billion back for the 230,000 investors she believes got tricked. She thinks this case shows why we need better rules for cryptocurrency to protect everyone's money.
DCG hit back, saying James' lawsuit is groundless and they're confident they'll win in court. They claim they've always done business legally and ethically, and they're sure they'll prove it. Genesis, on the other hand, is in a tight spot. They've filed for bankruptcy in January 2023 and are now shutting down. They agreed to settle with James' office, promising to pay back customers through bankruptcy if the court agrees.
DCG and Gemini didn't say anything right away about this. Barry Silbert, DCG's CEO, and Soichiro Moro, a former Genesis CEO, are also named in the lawsuit. Genesis went bankrupt shortly after stopping withdrawals from Gemini Earn customers when Sam Bankman-Fried's FTX cryptocurrency exchange crashed. Both Genesis and Gemini are also dealing with a lawsuit from the U.S. Securities and Exchange Commission (SEC) for not following the rules meant to protect Gemini Earn customers.
Just last week, Genesis agreed to pay the SEC a $21 million fine, but only after they repay their customers first. Meanwhile, Gemini is suing DCG over their crypto lending deal that went wrong.