CRIME
NY AG Expands Fraud Lawsuit Against Crypto Firms Linked To Winklevoss Twins
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New York Attorney General Letitia James on Friday expanded her office’s cryptocurrency fraud lawsuit against Digital Currency, its Genesis Global Capital unit, and Gemini Capital, an exchange run by twin brothers Cameron and Tyler Winklevoss.
The amended lawsuit comes after more investors came forward to allege they were defrauded, tripling the alleged fraud to more than $3 billion.
The lawsuit was originally filed in October last year, alleging the cryptocurrency companies Gemini, Genesis and DCG misled investors, causing more than $1 billion in losses. Further investigation uncovered additional investors defrauded to the tune of an additional $2 billion. In total, prosecutors allege 230,000 investors were defrauded.
“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” said Attorney General James. “The fraud and deceit were so expansive that many additional people have come forward to report similar harm. 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.”
According to the lawsuit, Gemini assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. Gemini Earn was billed as a program to allow customers to lend crypto assets to Genesis in exchange for high returns.
But after losing more than $1.1 billion on loan defaults, executives allegedly tried to conceal their losses with a $1.1 billion promissory note, in which DCG agreed to pay Genesis $1.1 billion in ten years with just 1% interest.
Prosecutors allege that DCG, through Genesis, used the promissory note as part of a scheme to defraud investors and the public about Genesis financial condition.
TMX contributed to this article.
