New York Attorney Raises DCG Fraud Claims to $3B

New York Attorney has increased the projected penalty for DCG in an ongoing lawsuit with accusations of investor fraud from $1B to $3B.

The New York Attorney General Letitia James has recently increased the projected penalty amount imposed on Digital Currency Group (DCG) in the purported lawsuit. According to a statement issued by the office of the New York Attorney General, the action against DCG has been broadened.

Consequently, the initial accusation of engaging in investor fraud amounting to one billion dollars against DCG has been broadened to charging them with taking part in a criminal act worth 3 billion dollars.

The ongoing study of the matter eventually led to the discovery of this fresh understanding. New York attorney has acknowledged that investigators later determined that other investors had been cheated resulting in the discovery of an additional $2 billion.

In a statement, New York Attorney General James stated, “After months of false promises, we pulled back the curtain and revealed that DCG was lying to investors and defrauding them out of billions of dollars.”

In the previous year, the official filed a lawsuit against Gemini Trust Company (Gemini), Genesis Global Capital LLC and its affiliates (Genesis) and Digital Currency Group, Inc. for the roles they played in the fraudulent scheme that resulted in the loss of one billion dollars by 230,000 investors.

It is important to note that the case was based on a cryptocurrency lending program known as Gemini Earn. Investors accused these companies of deceiving them by making unattainable promises regarding the interest rate they would receive on their cryptocurrency investments through the Gemini Earn program.

As soon as prospective investors began to deposit their money, Genesis initiated a lending program that included certain risky borrowing circumstances. Furthermore, the terms of their activities were in direct opposition to the low-risk image that Gemini had created before.

According to the allegations, Genesis and its parent company DCG attempted to conceal the magnitude of the losses experienced due to the dangerous part that Genesis threaded. DCG and Genesis planned to create a false promissory note in which DCG agreed to pay Genesis $1.1 billion over ten years at an interest rate of one percent.

DCG created the false promissory note to conceal additional information on the losses it had incurred. During that period, the pact was the source of controversy, with many individuals including crypto veteran Vijay Boyapati pointing out the defects in the arrangement.

DCG’s previous commitment to return $1.1 billion over 10 years makes it unsurprising that the litigation has tripled. Given that Grayscale Investments the company that issued GBTC is a subsidiary of DCG, the recent events may have a detrimental effect on the market’s expectations for GBTC.

The spot Bitcoin exchange-traded fund (ETF) is experiencing significant outflows which indicates that it is likely to revert to its selloff weeks. Any lawsuit in DCG continuing to drag on could further influence this pattern.