New York Attorney General Escalates Legal Action Against DCG
New York Attorney General Letitia James has tripled the estimated size of the alleged fraud by Digital Currency Group (DCG) to over $3 billion. This comes after a prolonged investigation that uncovered additional investors defrauded of $2 billion. The lawsuit centers on the cryptocurrency lending program Gemini Earn.
Allegations Against DCG and Genesis
The initial lawsuit targeted Gemini, Genesis, and DCG over the Gemini crypto lending program, alleging the defrauding of over 29,000 New Yorkers of over $1 billion. The amended complaint now reveals that the companies allegedly defrauded over 230,000 investors of more than $3 billion. James accused DCG and Genesis of disguising $1.1 billion in losses through misstatements and concealment.
Extensive Nature of the Fraud
Attorney General James emphasized the extensive nature of the fraud, stating that DCG was lying to investors and defrauding them out of billions. DCG has yet to respond to requests for comment on the matter.
Fraudulent Scheme and Need for Stronger Regulations
The lawsuit highlights instances where Gemini assured investors that investing with Genesis through the Gemini Earn program was low-risk, despite internal analyses showing the financials were risky. Attorney General James condemned the fraudulent scheme and emphasized the need for stronger cryptocurrency regulations to protect all investors.
Additional Investors Affected
Since the initial lawsuit, additional investors have come forward with complaints, revealing the widespread nature of the fraud. Investigations revealed that other investors who contributed directly to Genesis were also affected. The amended complaint seeks restitution of more than $3 billion for defrauded investors.
Expanding Efforts to Regulate the Cryptocurrency Industry
This development follows Genesis Global Holdco’s recent settlement with the New York Attorney General (NYAG) and the Securities and Exchange Commission (SEC). Attorney General James has been proactive in issuing warnings and notices to virtual currency investors to ensure accurate reporting and payment of taxes. This is part of James’ continued efforts to regulate the cryptocurrency industry and protect investors.
Previous Legal Actions
In previous legal actions, Attorney General James initiated proceedings against Gemini, Genesis, and DCG for defrauding investors. Recoveries were also made from other cryptocurrency platforms operating illegally. James’ actions aim to increase regulations and hold accountable those engaging in deceptive practices within the cryptocurrency space.
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