February 12, 2024

Allegations of $3 Billion Crypto Fraud Rock Digital Currency Group

The NY Attorney General has accused Digital Currency Group (DCG) and its affiliates of conducting a crypto fraud scheme estimated to exceed $3 billion.

The recent bombshell from the New York Attorney General Letitia James has sent shockwaves through the cryptocurrency community, accusing Digital Currency Group (DCG) and its associates of orchestrating a massive fraud scheme, with estimates soaring above $3 billion.

These accusations mark a significant escalation since October, implicating not only DCG but also its Genesis Global Capital unit and the Gemini Trust, operated by the well-known Winklevoss twins, Cameron and Tyler.

Central to the lawsuit is the Gemini Earn program, which enticed investors with the promise of substantial returns for lending their cryptocurrency assets. However, James alleges that DCG and Genesis deceived investors, leading to losses exceeding $1 billion. Shockingly, the deception extended even to direct investors in Genesis, who were falsely assured of the safety of their funds.

With over 230,000 affected investors, the lawsuit seeks restitution totaling more than $3 billion. Letitia James stated:

“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.”

The legal troubles for DCG and its subsidiaries continue to mount. Genesis filed for bankruptcy in January 2023 following the suspension of withdrawals by Gemini Earn customers in the aftermath of the FTX collapse. Both DCG and Genesis have also faced legal action from the US Securities and Exchange Commission (SEC) for their alleged failure to disclose information adequately, putting customer investments at risk.

Earlier this month, debtors of the bankrupt crypto lending firm Genesis sought expedited approval to liquidate assets, which include holdings of nearly $1.4 billion in the Grayscale Bitcoin Trust (GBTC).

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