DCG, also known as Digital Currency Group, is facing a lawsuit accusing them of defrauding cryptocurrency investors. The company is now seeking to dismiss the lawsuit in a New York Court. According to a Reuters report, DCG’s Genesis Global Capital business has been accused of fraud by its investors.
The New York Attorney General, Letitia James, filed the lawsuit last year, targeting DCG and its crypto lending activities through Genesis. The Winklevoss brothers’ exchange, Gemini Trust, was also included in the lawsuit. It was alleged that the companies were involved in a 1 billion dollar fraud scheme.
In February, James amended the complaint and added that other investors had come forward with claims of being misled by Gemini Earn, an investment program. The investigation revealed that these additional investors were also defrauded, resulting in a total of $2 billion in lost assets.
The attorney general’s office has accused the companies of defrauding over 230,000 investors of more than $3 billion. According to the Reuters report, DCG argued in its motion to dismiss the case that it cannot be held responsible for sharing social media posts by Genesis. They stated that a tweet from June 2022, which mentioned the company’s strong balance sheet and successful lending business, was an example of corporate optimism and not a claim made by DCG.
The news comes after the New York State Department of Financial Services (DFS) announced that Gemini Trust has agreed to repay at least $1.1 billion to its customers. The state found that Gemini had failed to conduct due diligence on an unregulated third party, which resulted in customers losing access to their assets after Genesis Global Capital experienced a financial meltdown.
DFS Superintendent Adrienne A. Harris stated in a media release that Gemini’s conduct was not in line with due diligence. Gemini Trust, formerly known as Gemini X, thanked DFS on Twitter for their role in the settlement with Genesis and other creditors in the bankruptcy case.
To stay updated on all things related to crypto, subscribe to the PYMNTS daily Crypto Newsletter.
