Judge Allows Most of NYAG’s Securities Fraud Case Against DCG to Proceed
A New York judge has allowed most of Attorney General Letitia James' civil securities fraud suit against Digital Currency Group (DCG) and its executives to proceed to trial.
- In 2023, James sued DCG, CEO Barry Silbert, former Genesis Global Capital CEO Michael Moro, and Gemini for allegedly concealing a $1 billion deficit in Genesis' balance sheet linked to the collapse of Three Arrows Capital (3AC).
- The suit claims DCG made false assurances on social media about absorbing Genesis' losses, while actually covering it with a promissory note to pay Genesis $1.1 billion over ten years at 1% interest.
- James alleges that DCG has not made any payments under this note.
- Gemini and Genesis settled with the Office of the Attorney General (OAG), but DCG, Silbert, and Moro contested the charges, claiming they were not selling securities.
- The judge found that the OAG adequately alleged that the Gemini Earn program qualifies as a security.
- Two claims against DCG, Moro, and Silbert were dismissed as duplicative.
DCG plans to continue contesting the lawsuit, asserting that the allegations are unfounded.