According to Fortune, Digital Currency Group (DCG) has filed a motion with the New York Supreme Court to dismiss a lawsuit filed against the company by New York Attorney General Letitia James.

The lawsuit, which dates back to 2023, accuses DCG, its lending subsidiary Genesis and crypto company Gemini of defrauding more than 230,000 investors involving more than $1 billion. DCG CEO Barry Silbert is also named as a defendant in the lawsuit.

'Untenable statement'

The lawsuit accuses DCG of trying to conceal more than $1.1 billion in losses during the 2022 crypto market crash and defrauding Gemini and investors. However, DCG's lawyers argued that the charges brought by the Attorney General's Office were "baseless" and lacked substance.

Lawyers for the Digital Currency Group further said the accusations constituted "indefensible and baseless statements" and accused the attorney general's office of looking for a "scapegoat worthy of headlines."

DCG's legal team claims the company acted in good faith and under the guidance of top accountants and investment bankers, including issuing a controversial $1.1 billion promissory note to Genesis. They argued that DCG's support for its subsidiaries should not be portrayed as engaging in fraud.

The digital currency group, founded in 2015, has gained influence within the crypto industry through its venture portfolio and subsidiaries including Genesis, Foundry (a mining company) and CoinDesk (a cryptocurrency exchange). Genesis has partnered with Gemini, Genesis lends assets to trading firms such as Three Arrows Capital and Alameda Research.

Gemini’s Earn program was launched during the 2021 crypto bull run, enabling customers to earn high yields on their crypto assets. Genesis partners with Gemini to lend assets to clients and further lends them to companies such as Three Arrows Capital and Alameda Research.

However, the plan collapsed in 2022 due to the failure of Genesis' counterparties. According to Bitcoinist, Genesis subsequently stopped withdrawals, filed for bankruptcy, and faced legal action from the Securities and Exchange Commission and the New York Attorney General’s Office.

Digital currency group denies involvement in lawsuit allegations

According to the report, the Digital Currency Group insisted that it was not involved in many of the allegations mentioned in the lawsuit, including accusations that Gemini made false statements about the risks of the Earn program. Lawyers argued that the fraud charges against DCG relied on others' retweets, citing a federal statute barring liability for retweets.

Additionally, DCG's attorneys claimed that the promissory note was valid and properly endorsed by the company's board of directors and advisors. They believe that DCG's statement about the "normal operations" of its business is too vague and cannot be used as a basis for fraud charges.

While litigation between the digital currency group and New York Attorney General Letitia James is still ongoing, Genesis reached a settlement with the attorney general’s office over its bankruptcy proceedings in February. Currently, DCG and Genesis are in dispute over the subsidiary's bankruptcy plan. #DCG #诉讼指控