New York Attorney General Increases Estimated Penalty on DCG Lawsuit
In a recent development, New York Attorney General Letitia James has increased the estimated size of the penalty in the alleged lawsuit against Digital Currency Group (DCG). The initial allegation of $1 billion investor fraud has now been expanded to $3 billion, as revealed through continued investigation into the matter.
DCG Accused of False Promises
The expanded lawsuit against DCG stems from the discovery that more investors were defrauded, adding an additional $2 billion to the criminal act. Attorney General James stated, “After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions.”
Last year, legal action was taken against Gemini Trust Company, Genesis Global Capital, and Digital Currency Group for their involvement in defrauding 230,000 investors of $1 billion through the Gemini Earn crypto lending program.
Gemini Earn Program Goes Sour
These firms were accused of misleading investors by promising unrealistic interest rates on their crypto investments. Genesis initiated a risky lending scheme that contradicted the low-risk image presented by Gemini. To conceal losses, DCG and Genesis planned a fraudulent promissory note, further damaging their reputation.
The lawsuit’s expansion raises questions about DCG’s ability to repay its debts, as it originally planned to repay $1.1 billion over ten years. The market outlook for GBTC, issued by Grayscale Investments (a subsidiary of DCG), may be negatively impacted by these events.
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