Crypto fraud suit tied to Winklevoss twins expanded to $3B by NY AG Letitia James

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 $3 billion.

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

She claimed they caused more than $1 billion 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.

The attorney general 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 $3 billion of restitution for the more than 230,000 investors who she believes were defrauded.

New York AG Letitia James tripled the size of Digital Currency Group’s alleged fraud scheme to more than $3 billion. AP

“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.

James in October sued Digital Currency, its Genesis Global Capital unit, and Gemini Capital, the exchange run by twin brothers Cameron and Tyler Winklevoss. Getty Images for Hauser & Wirth

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 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 $21 million fine, provided it can fully repay customers through the bankruptcy process. Gemini, meanwhile, has sued DCG over their failure of their crypto lending partnership.