New York Expands Fraud Case Against Digital Currency Group to $3 Billion

New York Attorney General Letitia James has amplified its fraud case against Digital Currency Group (DCG), now saying the company is responsible for $3 billion in investor losses tied to the Gemini Earn product and to direct investments with Genesis, according to a new court filing.

As stated in an initial $1 billion fraud lawsuit against DCG, its defunct lending platform Genesis and Gemini Trust Co. in October, the companies are accused of misleading investors and assuring them of the safety of their money even as the companies’ managements were aware that doom fast approached them. The fraud case focused at first on the Gemini Earn investment program that Genesis and Gemini ran together, but after the lawsuit, James’ office said many more investors raised complaints of being swindled by Genesis more directly.

As many as 230,000 people lost as much as $3 billion, according to the attorney general, spurring Friday’s expansion of the lawsuit in the New York Supreme Court.

“The fraud and deceit were so expansive that many additional people have come forward to report similar harm,” James said in a statement. “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.”

The company responded Friday by accusing the attorney general of playing for headlines.

“There is nothing new here,” a DCG spokesperson said in an emailed statement, accusing the attorney general of making a “baseless complaint” to seek more press attention. “We will fight the claims aggressively and we will win. DCG has always conducted its business lawfully and with integrity, and DCG and Barry Silbert will be fully vindicated.”

UPDATE (February 9, 2024, 18:21 UTC): Adds DCG response.