New York Attorney General Letitia James expanded the state’s case against Digital Currency Group, tripling the estimated size of the alleged fraud to more than $3 billion.
James said that as the investigation continued, the firm realized that more investors had been defrauded and an additional $2 billion in assets had been lost. statement It was released on Friday. The lawsuit centers on a cryptocurrency lending program called Gemini Earn.
“While the initial lawsuits primarily focused on losses for retail investors participating in the Gemini Earn investment program, as complaints grew, the complex nature of the fraud meant that funds were transferred directly to affiliates of DCG. It became clear that other investors who provided “Genesis” were also defrauded, NYAG said.
In October, NYAG sued Gemini, Genesis, and its parent company DCG over Gemini’s cryptocurrency lending program. James said at the time that the three companies defrauded more than 29,000 New Yorkers out of more than $1 billion.James too Said DCG and Genesis”A months-long campaign of misrepresentations, omissions, and concealments concealed $1.1 billion in losses. ”
NYAG now reveals that the companies defrauded more than 230,000 investors out of more than $3 billion, according to the newly amended complaint.
“After months of false promises, we pulled back the curtain and revealed that DCG lied to investors and defrauded them of billions of dollars,” Attorney General James said in a statement. Stated. “The fraud and deception has become so widespread that many more people have come forward to report similar incidents.
DCG did not respond to requests for comment.
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This comes after Genesis Global Holdco, which filed for bankruptcy protection in January 2022, announced in a court filing Thursday that it had reached a settlement with NYAG. DCG is the company’s parent company.
“After several months of intense negotiations, the debtors and NYAG have reached a resolution of the New York litigation,” Genesis said in a filing in the U.S. Bankruptcy Court for the Southern District of New York. A judge must approve the settlement.
Last week, Genesis Global Holdco resolved The company agreed to pay $21 million in a lawsuit brought by the Securities and Exchange Commission.
SEC said Gemini Earn program is unregistered Securities They were able to raise “billions of dollars” worth of cryptocurrencies from thousands of investors. The SEC said it suspected Genesis lacked sufficient liquid assets to cover exit costs a year after the program began and was starved of investors. James, of New York, said Genesis hid $1.1 billion in losses.
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