Bitcoin Foundation Chairman Brock Pierce discusses Bitcoin's performance in the wake of ETF declines and former President Trump's concerns about digital currencies.
New York Attorney General Letitia James announced Friday that she is expanding the lawsuit. cryptocurrency company Gemini, Genesis Global Capital and its parent company Digital Currency Group (DCG) are accused of defrauding investors, with total fraud claims against the companies tripled to $3 billion.
James filed a $1.1 billion lawsuit against both companies in October and said more victims have since come forward.
New York AG claims Gemini was founded by billionaire twins Cameron and Tyler Winklevoss and is best known for suing Meta's CEO. mark zuckerberg In Facebook's early days, it “lied to investors” by assuring them that investments in the Gemini Earn program, which it ran with the bankrupt Genesis, were safe.
Tyler and Cameron Winklevoss waged a famous legal battle against Mark Zuckerberg over the creation of Facebook. (Stephanie Keenan/Getty Images, Hauser & Wirth/Getty Images)
But the complaint alleges that Genesis' loans were actually at risk because at one point they were “highly concentrated” with FTX founder Sam Bankman Fried's crypto hedge fund, Alameda Research. However, it is said that Mr. Gemini was aware of this and did not disclose it.
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The attorney general said that as more investors came forward, “the fraud perpetrated by DCG through Genesis” also ensnared investors who sent money directly to Genesis and were falsely convinced that their funds were safe. said it has become clear.
Former Genesis CEO Soichiro Moro and DCG founder and CEO Barry Silverbart were also named in the lawsuit.
“This illegal cryptocurrency scheme and the horrific economic losses suffered by real people are yet another reminder of why we need stronger cryptocurrency regulation to protect all investors,” James said. said in a statement.
New York State Attorney General Letitia James speaks during a press conference at the New York Attorney General's Office on September 21, 2022. (Photo by Michael M. Santiago/Getty Images / Getty Images)
Many of the additional investors were individual customers, including a chiropractor and a stay-at-home dad who invested $2 million in Bitcoin in Genesis, according to the complaint.
The DCG on Friday called James' lawsuit “baseless” and said it expected to prevail in court.
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“DCG has always operated lawfully and honestly, and DCG and Barry Silbert will be fully vindicated,” the company said in a statement.
Barry Silbert, founder and CEO of Digital Currency Group Inc., speaks at the Skybridge Alternatives (SALT) conference on Thursday, May 9, 2019 in Las Vegas, Nevada. (Joe Bagwitz/Bloomberg via Getty Images/Getty Images)
Genesis will close after filing for bankruptcy in January 2023.
Late Thursday, the company reached a settlement with James's office, agreeing to pay her fraud claims as long as it repays customers in full through the Chapter 11 process. The settlement must be approved by a bankruptcy judge.
Representatives for DCG and Gemini did not respond to requests for comment.
Genesis filed for bankruptcy two months after halting withdrawals by Gemini Earn customers following the collapse of Bankman Freed's cryptocurrency exchange FTX.
Both Genesis and Gemini were also sued by the U.S. Securities and Exchange Commission for allegedly circumventing disclosure requirements meant to protect Gemini Earn customers.
Genesis last week agreed to pay a $21 million fine to the SEC, also on the condition that it repays customers first.
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Meanwhile, Gemini sued DCG over its failed cryptocurrency financing partnership.
Reuters contributed to this report.
