New York attorney general expands crypto lawsuit tied to Winklevoss twins

Cameron Winklevoss, chief executive of Gemini Trust, left, speaks as Tyler Winklevoss, Gemini’s CFO, listens during a conference in Las Vegas on 12 May 2016. Photograph: David Paul Morris/Bloomberg via Getty Images

The New York attorney general, Letitia James, on Friday expanded her lawsuit against Digital Currency Group and other cryptocurrency defendants, tripling the size of their alleged fraud scheme to more than $3bn.

James had in October sued DCG, its Genesis Global Capital unit, and Gemini Trust, the exchange run by twin brothers Cameron and Tyler Winklevoss.

She claimed they caused more than $1bn of losses by misleading investors about the Gemini Earn program, which let customers lend crypto assets to Genesis in exchange for a high rate of return.

James said it had become clear as more investors came forward that “the scam perpetrated by DCG through Genesis” also ensnared investors who sent money directly to Genesis and were falsely assured their money was safe.

James is seeking more than $3bn of restitution for the more than 230,000 investors who she believes were defrauded.

“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,” James said in a statement.

Representatives for DCG, Genesis and Gemini did not immediately respond to requests for comment.

Barry Silbert, who is DCG’s chief executive, and Soichiro Moro, a former Genesis chief executive, are also defendants.

Genesis filed for bankruptcy in January 2023, two months after halting withdrawals by Gemini Earn customers following the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange.

Both Genesis and Gemini were also sued by the US Securities and Exchange Commission, which said they bypassed disclosure requirements meant to protect Gemini Earn customers.

Last week, Genesis agreed to pay the SEC a $21m fine, provided it can fully repay customers through the bankruptcy process. Gemini, meanwhile, has sued DCG over their failure of their crypto lending partnership.

The Winklevoss twins came to mainstream fame when they were portrayed in the film The Social Network about the birth of Facebook. They were at Harvard University with Mark Zuckerberg, whom they later sued, claiming he stole their idea for a website that they called Harvard Connection, but which he called the Facebook.

Letitia James is currently awaiting the outcome of the fraud trial she prompted in New York of Donald Trump and his business empire, the Trump Organization.

Reuters contributed reporting