New York Attorney General Letitia James watches former US President Donald Trump attend the Trump Organization civil fraud trial, at the New York State Supreme Court in the Manhattan borough of New York City, United States, on October 24, 2023.
Cool Mike | Reuters
New York Attorney General Letitia James on Friday expanded her case against Digital Currency Group and other cryptocurrency-related defendants, tripling the size of their alleged fraud scheme to more than $3 billion.
In October James sued DCG, his Genesis Global Capital unit, and Gemini Trust, the exchange run by twin brothers Cameron and Tyler Winklevoss.
It said it caused more than $1 billion in losses by deceiving investors about the Gemini Earn program, which allows customers to lend cryptocurrencies to Genesis in exchange for a high rate of return.
The attorney general said it became clear as more investors came forward that “the scam perpetrated by DCG via Genesis” also ensnared investors who sent money directly to Genesis and were falsely assured that 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 yet another reminder of why stronger 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.
Also charged are Barry Silbert, CEO of DCG, and Soichiro Moro, former CEO of Genesis.
Genesis filed for bankruptcy in January 2023, two months after it stopped withdrawals from Gemini Earn customers 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 circumvented disclosure requirements intended to protect Gemini Earn customers.
Last week, Genesis agreed to pay the SEC a $21 million fine, provided it can repay customers in full through the bankruptcy process. Gemini, meanwhile, is suing DCG over the failure of their crypto lending partnership.