NY Attorney General Letitia James announced on Friday that she is significantly expanding her lawsuit against Digital Currency Group (DCG) and its lending arm, Genesis Global Capital.
According to Reuters, the NY attorney general is now seeking over $3 billion in restitution, tripling her initial estimate of investor losses.
- The lawsuit, originally filed in October 2023, accused DCG entities of misleading investors.
- Claimed losses topped $1 billion related to the failed Gemini Earn program.
- James says more alleged victims have since come forward.
- The restitution amount increased to over $3 billion, with 230,000+ investors impacted.
James’ original lawsuit centered on losses from the Gemini Earn scheme, which allowed customers to lend crypto to Genesis for high interest rates.
However, the attorney general now believes Genesis also deceived clients who lent funds directly in separate arrangements beyond Gemini Earn.
NY Attorney increases estimate of total losses
With more information on the breadth of the alleged fraud, James has dramatically increased her estimate of total losses and is pursuing much greater restitution.
“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.
The expanded legal action represents the latest fallout from Genesis and FTX’s collapse, which affected the crypto sector. James stated that the scale of losses from Genesis and FTX points to the clear need for stronger cryptocurrency regulations to protect all investors.
For its part, Genesis filed for bankruptcy in January after halting withdrawals when crypto prices cratered. The SEC also filed a lawsuit against the company and Gemini in connection with the failed Earn scheme.
While legal battles continue, the events have fueled calls for lawmakers to urgently address gaps in consumer protections for crypto users.