February 20, 2024

NY AG expands crypto fraud lawsuit linked to Winkelvoss twins to $3 billion


New York Attorney General Letitia James introduced Friday that she is increasing her lawsuit towards cryptocurrency firms Gemini, Genesis Global Capital and its father or mother firm, Digital Currency Group (DCG), for allegedly defrauding traders, tripling the whole fraud claims towards the companies to $3 billion.

James filed a $1.1 billion lawsuit towards the businesses in October and says that extra victims have come ahead since then. 

The New York AG claims that Gemini, based by billionaire twins Cameron and Tyler Winklevoss – finest recognized for suing Meta CEO Mark Zuckerberg over Facebook’s early days – “lied to investors” by assuring them their investments have been protected within the Gemini Earn program it ran with now-bankrupt Genesis. 

Tyler and Cameron Winklevoss

Tyler and Cameron Winklevoss waged a well-known authorized battle towards Mark Zuckerberg over Facebook’s beginnings.  (Stefanie Keenan/Getty Images for Hauser & Wirth / Getty Images)

However, the go well with alleges, Genesis’ loans have been truly dangerous, as a result of at one level they have been “highly concentrated” with FTX founder Sam Bankman-Fried’s crypto hedge fund Alameda Research, which Gemini purportedly knew and didn’t disclose.

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The lawyer common mentioned it had grow to be clear as extra traders got here ahead that “the scam perpetrated by DCG through Genesis” additionally ensnared traders who despatched cash instantly to Genesis and have been falsely assured that their cash was protected.

Former Genesis CEO Soichiro Moro and DCG founder and CEO Barry Silbert have been additionally named within the go well with.

“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 mentioned in an announcement.

New York Attorney General Letitia James speaks at a press conference

NY Attorney General Letitia James speaks throughout a press convention on the workplace of the Attorney General on September 21, 2022, in New York. (Photo by Michael M. Santiago/Getty Images / Getty Images)

Many of the extra traders have been retail prospects, the grievance mentioned, together with a chiropractor and a stay-at-home father who every invested $2 million of bitcoin with Genesis.

DCG mentioned Friday that James’ lawsuit was “baseless” and that it expects to win in court docket.

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“DCG has always conducted its business lawfully and with integrity, and DCG and Barry Silbert will be fully vindicated,” it mentioned in an announcement.

Barry Silbert speaks at a conference

Barry Silbert, founder and chief government officer of Digital Currency Group Inc., speaks in the course of the Skybridge Alternatives (SALT) convention in Las Vegas, Nevada, on Thursday, May 9, 2019. (Joe Buglewicz/Bloomberg through Getty Images / Getty Images)

Genesis is shutting down after submitting for chapter in January 2023.

Late Thursday, it reached a settlement with James’ workplace, agreeing to pay on her fraud claims as long as it absolutely repays prospects by way of the Chapter 11 course of. That settlement requires a chapter choose’s approval.

Representatives for DCG and Gemini didn’t instantly reply to requests for remark.

Genesis filed for chapter two months after halting withdrawals by Gemini Earn prospects following the collapse of Bankman-Fried’s FTX cryptocurrency trade.

Both Genesis and Gemini have been additionally sued by the U.S. Securities and Exchange Commission, which mentioned they bypassed disclosure necessities meant to defend Gemini Earn prospects.

Last week, Genesis agreed to pay the SEC a $21 million superb, additionally contingent on its repaying prospects first.

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Gemini, in the meantime, has sued DCG over the failure of their crypto lending partnership.

Reuters contributed to this report.



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