- NYAG expanded lawsuit against DCG and Genesis, raising alleged losses from over $1B to $3B and affecting over 230,000 investors
- Lawsuit originally began in October 2022 alleging fraud related to Gemini Earn crypto lending product
- Amended complaint comes despite reports Genesis was close to settling; unclear if settlement reached as NYAG does not mention agreement
The New York Attorney General’s office (NYAG) has expanded its lawsuit against Digital Currency Group (DCG) and related parties, alleging an additional $2 billion in losses and bringing the total to $3 billion.
Background on the Lawsuit
The lawsuit originally began in October 2022 when the NYAG targeted DCG, Genesis, and Gemini over the Gemini Earn crypto lending product. The NYAG alleged that executives tried to conceal losses with a $1.1 billion promissory note between Genesis and DCG.
On February 9th, the NYAG raised its fraud claims against DCG, Genesis, and former Genesis CEO Soichiro Moro. The office explicitly stated that the amended complaint comes after additional injured investors came forward.
This amended complaint raises the alleged losses from over $1 billion to $3 billion affecting over 230,000 investors. NY Attorney General Letitia James said the “fraud and deceit were so expansive” that many other injured investors have now come forward.
The amended complaint comes despite earlier reports that Genesis was close to settling with the NYAG based on bankruptcy filings. One filing on February 8th stated the debtors and NYAG had reached a resolution. However, the NYAG’s update does not mention any settlement.
Ongoing Legal Action
The SEC has also taken action against Genesis, leading to a conditional $21 million settlement. Genesis will only pay this if it cannot fully compensate customers through bankruptcy proceedings.
It remains unclear whether Genesis has settled with the NYAG. The NYAG’s amended complaint does not mention any agreement. It simply states the office raised its fraud claims to $3 billion after more investors came forward alleging losses from Genesis and DCG.
The legal battle between the NYAG, DCG, and Genesis continues to develop. While Genesis may have reached a tentative settlement agreement, the NYAG’s latest move to expand its lawsuit to $3 billion in alleged losses indicates the case is far from over. The coming weeks will likely bring more updates on whether a settlement is reached or if the lawsuit proceeds further.