Digital Currency Group faces monumental $3 billion lawsuit over investor deception

February 12, 2024 Robert Abruzzese, Courthouse Editor

Attorney General James has intensified efforts to regulate the cryptocurrency industry through a series of legal actions, and on Friday announced that she has escalated her legal battle against the Digital Currency Group (DCG) and its affiliates.
Photo: Ted Shaffrey/AP

Share this:

Attorney General Letitia James has escalated her legal battle against the Digital Currency Group (DCG) and its affiliates, filing an amended complaint that accuses it of defrauding investors out of an additional $2 billion. This expansion follows a series of legal actions by James aimed at reining in the cryptocurrency industry to protect investors.

The lawsuit, which now seeks more than $3 billion in restitution, alleges that DCG, its CEO Barry Silbert, and the former CEO of Genesis Global Capital, LLC, Soichiro Moro, misled investors about the safety of their investments. The case builds on an October 2023 suit against Gemini Trust Company, Genesis and DCG related to the Gemini Earn investment program, which resulted in more than $1 billion in investor losses.

“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” James said. “The fraud and deceit were so expansive that many additional people have come forward to report similar harm. This illegal cryptocurrency scheme, and the horrific financial losses that real people have suffered, are yet another reminder of why stronger cryptocurrency regulations are needed to protect all investors.”

James’ investigation revealed a complex scheme where DCG and Genesis attempted to hide more than $1.1 billion in loan defaults through a promissory note, misleading investors about Genesis’ financial health. The Attorney General’s Office has found that more than 230,000 investors were affected, leading to heightened calls for stricter cryptocurrency regulations.

In October 2023, Attorney General James initiated a lawsuit against Gemini, Genesis and DCG, alleging more than $1 billion in investor fraud linked to the Gemini Earn program, which was misrepresented as a low-risk investment.

Investigations revealed that internal assessments of Genesis depicted financial instability, and subsequent losses were obscured by a $1.1 billion promissory note scheme, misleading investors about Genesis’ financial health and operational viability.

Following the suit, more victims emerged, leading to an amended complaint seeking more than $3 billion in restitution for a broader group of defrauded investors.

Attorney General James has intensified efforts to regulate the cryptocurrency industry through a series of legal actions, including a recent lawsuit expansion against Digital Currency Group for investor fraud, alongside advocating for stricter industry regulations.

Since 2021, AG James has recovered significant sums from various crypto entities for illegal operations and deception, signaling a broad crackdown on industry malpractices. She encourages affected New Yorkers and industry insiders to report fraudulent activities.