The New York Attorney General’s Office (NYAG) has recently expanded its fraud claims against Digital Currency Group (DCG) and related parties, adding an additional $2 billion in alleged losses. This brings the total amount of losses to $3 billion, impacting over 230,000 investors. The NYAG has accused DCG of deceiving investors and defrauding them, leading to significant financial harm.
According to New York Attorney General Letitia James, DCG made false promises to investors and engaged in fraudulent activities on a large scale. The amended complaint filed by the NYAG includes DCG, DCG CEO Barry Silbert, DCG subsidiary Genesis Global Capital, and former Genesis CEO Soichiro Moro. These additions were a result of additional investors coming forward with claims. The NYAG’s investigation has revealed the extensive nature of the fraud and deceit perpetrated by DCG, prompting more victims to speak out.
Previous reports indicated that Genesis Global Capital had settled the NYAG lawsuit, as stated in bankruptcy filings. However, the recent update from the NYAG does not mention any settlement, leaving uncertainty about the agreement’s applicability to the increased amount. It remains to be seen whether a settlement has been reached and if it covers the additional losses alleged by the NYAG.
The NYAG initially filed its lawsuit against DCG, Genesis Global Capital, and independent partner Gemini in October 2023. The lawsuit targeted the companies’ offering of a crypto lending service called Gemini Earn, which was advertised as a low-risk product. However, the NYAG’s investigation uncovered significant financial risks associated with the venture. The complaint alleged that Genesis and DCG executives attempted to hide these losses by creating a $1.1 billion promissory note, which would be repaid over a ten-year period. The NYAG deemed this action as part of a larger scheme to defraud investors and the public.
In addition to the NYAG’s lawsuit, the Securities and Exchange Commission (SEC) has also taken action against Genesis Global Capital. The SEC’s involvement resulted in a conditional settlement of $21 million. However, this settlement will only be paid if Genesis cannot fully compensate customers through its ongoing bankruptcy proceedings.
The expanded fraud claims by the New York Attorney General’s Office against Digital Currency Group and related parties shed light on the alleged deception and deceit carried out by these entities. With the total losses now amounting to $3 billion, the impact on over 230,000 investors is significant. The ongoing legal actions and investigations by the NYAG and SEC will likely play a crucial role in determining the accountability of the accused parties and providing restitution to the affected investors.
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