New York Wants $3B from DCG As Legal Debacle Takes New Twist

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In a New development, New York Attorney General Letitia James has multiplied the estimated size of the estimated penalty on the alleged lawsuit against Digital Currency Group (DCG).

DCG Accused of False Promises

According to a statement released from the office of the NYAG, the lawsuit against DCG has been expanded. Consequently, rather than the initial alleged $1 billion investor fraud, DCG has now been accused of participating in a criminal act worth $3 billion. This new insight came as a result of continued investigation into the matter.

AG James confirmed that it was later discovered that more investors were defrauded and this summed up to the additional $2 billion. 

“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” Attorney General James said.

Last year, the official took legal action against Gemini Trust Company (Gemini), Gene­sis Global Capital, LLC and its affiliates (Genesis), and Digital Curre­ncy Group, Inc. for the roles they played in swindling 230,000 investors of $1 billion. Notably, the lawsuit was hinged on a crypto lending program called Gemini Earn. 

Gemini Earn Program Gone Sour

These firms were accused of misleading investors by promising them unrealistic interest on their crypto investment in the Gemini Earn program. Once interested investors plunged in their funds, Genesis kickstarted a lending scheme with some risky borrowing conditions and the terms of their activities contradicted the low-risk image­ that was earlier presented by Ge­mini.

Genesis and its parent firm DCG allegedly tried to conceal the extent of the losses incurred from the risky part that Genesis threaded. To further hide information on its losses, DCG and Gene­sis planned a fraudulent promissory note­ wherein DCG agree­d to pay Genesis $1.1 billion over te­n years at an interest rate­ of one percent. The agreement at the time stirred controversies with many, including crypto veteran Vijay Boyapati pointing out the flaw in the arrangement.

Now that the lawsuit has been tripled, little wonder how long DCG will take to repay based on its former plan to repay $1.1 billion over ten years.

The new turn of events may negatively impact the market outlook of GBTC, seeing that its issuer, Grayscale Investments is a subsidiary of DCG. The spot Bitcoin ETF is seeing huge outflows, suggesting a return to its selloff weeks, a trend that might further be impacted as any lawsuit in DCG drags on.

The post New York Wants $3B from DCG As Legal Debacle Takes New Twist appeared first on CoinGape.

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