Cryptocurrency Fraud Lawsuit Linked to Winklevoss Twins Now Worth $3 Billion: NY AG

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By Reuters

New York Attorney General Letitia James on Friday expanded her lawsuit against the cryptocurrency group and other cryptocurrency defendants, tripling the size of the alleged fraud scheme to more than $3 billion.

In October, James filed a lawsuit against Digitalcurrency, its Genesis Global Capital unit, and Gemini Capital, the exchange run by twin brothers Cameron and Tyler Winklevoss.

It alleged that they caused losses of more than $1 billion by misleading investors about the Gemini Earn program, which allows customers to lend crypto assets to Genesis in exchange for a high rate of return.

The prosecutor said it became clear as more investors came forward that “the fraud committed by DCG through Genesis” also ensnared investors who sent money directly to Genesis and were falsely assured that their money was safe.

James is seeking more than $3 billion in compensation for more than 230,000 investors who she believes were defrauded.

“This illegal cryptocurrency scheme, and the horrific financial losses real people have suffered, are 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.

Also accused are Barry Silbert, CEO of DCG, and Soichiro Moro, former CEO of Genesis.

Genesis filed for bankruptcy in January 2023, two months after withdrawals by Gemini Earn customers were halted 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 exceeded disclosure requirements meant to protect Gemini Earn customers.

Last week, Genesis agreed to pay a $21 million fine to the Securities and Exchange Commission, on the condition that it can repay customers in full through the bankruptcy process. Meanwhile, Gemini has filed a lawsuit against DCG over its failure in its cryptocurrency lending partnership.