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New York AG Triples Alleged Crypto Fraud to $3B

 |  February 12, 2024

New York Attorney General Letitia James has escalated her lawsuit against Digital Currency Group (DCG) and several other defendants. The lawsuit, initially filed in October, has now been expanded to include allegations of a fraud scheme totaling more than $3 billion, tripling its previous estimate.

The lawsuit originally targeted DCG, along with its Genesis Global Capital unit and Gemini Trust, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss. Attorney General James accused these entities of misleading investors regarding the Gemini Earn program. This program allowed customers to lend their cryptocurrency assets to Genesis in exchange for a promised high rate of return, reported Reuters.

According to James, the defendants’ actions resulted in losses exceeding $1 billion for investors. However, as the investigation progressed and more affected parties stepped forward, it became apparent that the scope of the alleged fraud was much larger than initially anticipated. The attorney general asserted that “the scam perpetrated by DCG through Genesis” had ensnared additional investors who had sent money directly to Genesis, falsely believing their investments were secure.

Related: NY Bill Would Allow Crypto Payments To State Agencies

Among the newly identified victims are numerous retail customers, including individuals like a chiropractor and a stay-at-home father, each of whom allegedly invested $2 million worth of bitcoin with Genesis. These cases underscore the breadth of the alleged deception and its impact on unsuspecting individuals from various walks of life.

The lawsuit represents a significant effort by authorities to hold cryptocurrency entities accountable for deceptive practices that have harmed investors. It also highlights the challenges faced by regulators in overseeing the rapidly evolving and often opaque world of digital currencies.

As the legal proceedings unfold, attention will undoubtedly turn to the response from the defendants and the broader implications for the cryptocurrency industry. This case serves as a stark reminder of the risks inherent in investing in unregulated markets and the importance of thorough due diligence by investors.

For now, the expansion of the lawsuit signals a heightened scrutiny of cryptocurrency activities by law enforcement agencies, promising further developments in the ongoing efforts to protect investors and maintain the integrity of financial markets.

Source: Reuters