n October 2022, New York Attorney General Letitia James filed a $1 billion civil fraud lawsuit against Digital Currency Group (DCG), Genesis, and Gemini Trust Company regarding the collapse of the Gemini Earn program. Now, the AG has expanded the scope of the case, alleging that DCG and Genesis are responsible for $3 billion in investor losses through both Gemini Earn and direct Genesis investments.

Image of Barry Silbert, CEO of DCG giving a speech
Barry Silbert, CEO of DCG, strongly denies allegations of $3 billion fraud.

The expanded allegations   

AG James claims that following the initial lawsuit, over 230,000 additional investors have come forward to report similar experiences of being misled by DCG and Genesis. The companies are accused of assuring investors their funds were safe, even as management was aware of major liquidity issues. As a result, the AG now alleges $3 billion in total losses suffered by investors in both Gemini Earn and direct Genesis investment products.

DCG denies wrongdoing

In response, a DCG spokesperson denounced the expanded allegations as "baseless" and intended only to garner more media attention. They maintain that DCG has "always conducted its business lawfully and with integrity" and will aggressively fight the claims. The company asserts it will ultimately be "fully vindicated" in court.

What's next for the case

The civil fraud trial is ongoing in New York state court. With the AG now alleging $3 billion in investor losses, the stakes are much higher for DCG and Genesis. They will need to mount a strong defense to dispute the expanded claims. A final ruling could significantly impact the two companies and set precedents for future crypto-related lawsuits. The case may also influence how other regulators approach investor protection in the crypto space going forward.

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