NY AG expands crypto fraud lawsuit linked to Winkelvoss twins to $3 billion

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New York Attorney General Letitia James announced Friday that she is expanding her suit against cryptocurrency firms Gemini, Genesis Global Capital and its genitor company, Digital Currency Group (DCG), for allegedly defrauding investors, tripling nan full fraud claims against nan firms to $3 billion.

James revenge a $1.1 cardinal lawsuit against nan companies successful October and says that much victims person travel guardant since then. 

The New York AG claims that Gemini, founded by billionaire twins Cameron and Tyler Winklevoss – champion known for suing Meta CEO Mark Zuckerberg complete Facebook's early days – "lied to investors" by assuring them their investments were safe successful nan Gemini Earn programme it ran pinch now-bankrupt Genesis. 

However, nan suit alleges, Genesis' loans were really risky, because astatine 1 constituent they were "highly concentrated" pinch FTX laminitis Sam Bankman-Fried's crypto hedge money Alameda Research, which Gemini purportedly knew and did not disclose.

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The lawyer wide said it had go clear arsenic much investors came guardant that "the scam perpetrated by DCG done Genesis" besides ensnared investors who sent money straight to Genesis and were falsely assured that their money was safe.

Former Genesis CEO Soichiro Moro and DCG laminitis and CEO Barry Silbert were besides named successful nan suit.

"This forbidden cryptocurrency scheme, and nan horrific financial losses that existent group person suffered, are yet different reminder of why stronger cryptocurrency regulations are needed to protect each investors," James said successful a statement.

Many of nan further investors were unit customers, nan title said, including a chiropractor and a stay-at-home begetter who each invested $2 cardinal of bitcoin pinch Genesis.

DCG said Friday that James' suit was "baseless" and that it expects to triumph successful court.

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"DCG has ever conducted its business lawfully and pinch integrity, and DCG and Barry Silbert will beryllium afloat vindicated," it said successful a statement.

Genesis is shutting down aft filing for bankruptcy successful January 2023.

Late Thursday, it reached a colony pinch James' office, agreeing to salary connected her fraud claims truthful agelong arsenic it afloat repays customers done nan Chapter 11 process. That colony requires a bankruptcy judge's approval.

Representatives for DCG and Gemini did not instantly respond to requests for comment.

Genesis revenge for bankruptcy 2 months aft halting withdrawals by Gemini Earn customers pursuing nan illness of Bankman-Fried's FTX cryptocurrency exchange.

Both Genesis and Gemini were besides sued by nan U.S. Securities and Exchange Commission, which said they bypassed disclosure requirements meant to protect Gemini Earn customers.

Last week, Genesis agreed to salary nan SEC a $21 cardinal fine, besides contingent connected its repaying customers first.

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Gemini, meanwhile, has sued DCG complete nan nonaccomplishment of their crypto lending partnership.

Reuters contributed to this report.