NY Attorney General expands lawsuit against Digital Currency Group

New York Attorney General Letitia James today filed an amended complaint, expanding the Office of the Attorney General’s (OAG) lawsuit against Digital Currency Group, Inc. (DCG), DCG’s CEO, Barry Silbert, and Genesis Global Capital, LLC and its affiliates’ (Genesis) former CEO, Soichiro Moro, for defrauding additional individuals and institutions of an additional $2 billion.

This amended complaint is the result of more investors coming forward following Attorney General James’ October 2023 suit against Gemini Trust Company, Genesis and DCG for misleading representations to investors about an investment program called Gemini Earn and causing over $1 billion in losses.

The OAG’s continued investigation revealed that these additional investors were similarly defrauded and provided with false assurances that their funds were safe when in fact they were not, leading to an additional $2 billion in assets that were lost. In total, OAG found that these companies defrauded more than 230,000 investors out of more than $3 billion.

In October 2023, Attorney General James filed a sweeping lawsuit against cryptocurrency companies Gemini, Genesis, and DCG for defrauding investors out of more than $1 billion. This suit was the result of an OAG investigation that found that Gemini lied to investors about an investment program it ran with Genesis called Gemini Earn. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment.

However, the OAG investigation uncovered that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. Additionally, OAG found that after losing more than $1.1 billion on loan defaults, Genesis, DCG, and their executives tried to conceal their losses by entering into a $1.1 billion promissory note, in which DCG agreed to pay Genesis $1.1 billion in a decade at only a one percent interest rate. The lawsuit states that DCG, through Genesis, used the promissory note as part of a scheme to defraud investors and the public about Genesis’ financial condition and its ability to operate its business.

Since that lawsuit was filed, additional investors have come forward to share their experiences and their losses due to the scam perpetrated by DCG through Genesis. While the initial suit focused largely on the losses of retail investors participating in the Gemini Earn investment program, as more complaints have been made, it became clear that the complicated nature of the fraud also swindled other investors who contributed their money directly to DCG’s affiliate Genesis.

As a result of these complaints, OAG filed the amended complaint and is now seeking more than $3 billion in restitution for defrauded investors.