New York Attorney General Letitia James has broadened the lawsuit against Digital Currency Group (DCG) to over $3 billion, following claims from investors of higher losses than initially estimated. The original lawsuit was approximately $1 billion before this expansion.
DCG stands accused of misleading investors and assuring them that their funds were secure when the company's management knew otherwise. DCG relied on lending platforms Genesis and Gemini Trust, both considered subpar, to carry out their transactions. According to a news article by Coindesk, as many as 230,000 people lost up to $3 billion after being misled by the company.
James initiated the lawsuit with the aim of barring Gemini, Genesis, and DSG from operating in New York's financial investment industry. The objective of this legal action is to safeguard investors and establish a standard for handling cryptocurrency transactions and fraudulent activities. As per another Coindesk report, it is alleged that Gemini was aware its loans were severely under-secured and highly concentrated on now-bankrupt trading firm Alameda Research without informing investors about the platform's precarious state. Barry Silbert, CEO of DCG, also faces charges of defrauding the public by attempting to hide significant losses from both the general public and investors.
Genesis Global Capital filed for bankruptcy in January, which led Gemini to sue Silbert. Silbert defended himself by asserting that the lawsuit was defamatory in nature. A spokesperson for DCG argued that there is no basis for James' lawsuit and it could cause substantial harm to Genesis creditors as the company is currently filing for Chapter 11 bankruptcy. A representative for Genesis maintained that the company did not break any laws and remains focused on maximizing recoveries for creditors during its Chapter 11 proceedings.
