Cryptocurrency fraud lawsuit involving Winklevoss twins totals $3 billion: NY AG

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From Reuters

New York Attorney General Letitia James on Friday expanded her case against Digital Currency Group and other crypto defendants, tripling the size of the fraud scheme to more than $3 billion.

In October, James sued Digital Currency, its Genesis Global Capital unit, and Gemini Capital, an exchange run by twin brothers Cameron and Tyler Winklevoss.

She alleged that she misled investors about the Gemini Earn program, which allows customers to lend crypto assets to Genesis in exchange for a high rate of return, causing losses of more than $1 billion.

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.

James is seeking more than $3 billion in damages from more than 230,000 investors who are believed to have been defrauded.

“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.

The DCG said on Friday that James' lawsuit was “baseless” and that it expected to prevail in court.

“DCG has always operated lawfully and honestly, and DCG and Barry Silbert will be fully vindicated,” the company said in a statement.

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.

Mr. Silbert, CEO of DCG, and Soichiro Moro, former CEO of Genesis, are also defendants.

Genesis filed for bankruptcy two months after halting withdrawals by Gemini Earn customers following the collapse of Sam Bankman Fried's FTX cryptocurrency exchange.

Both Genesis and Gemini were also sued by the 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. Meanwhile, Gemini sued DCG over a failed crypto financing partnership.