Crypto venture firm seeks dismissal of New York attorney general’s fraud lawsuit

(Reuters) – The Digital Currency Group (DCG) urged a New York court on Wednesday to dismiss the New York Attorney General’s lawsuit accusing it of defrauding crypto investors through its Genesis Global Capital unit.

Attorney General Letitia James has sued DCG, crypto lender Genesis, and Gemini Trust, the exchange run by twin brothers Cameron and Tyler Winklevoss, accusing the companies of a $3 billion fraud scheme.

Genesis, which is in bankruptcy, settled with James’ office in February.

James says that the companies misled investors about the Gemini Earn program, which let customers lend crypto assets to Genesis in exchange for a high rate of return.

The attorney general accuses DCG along with its chief executive Barry Silbert and Soichiro Moro, a former Genesis chief executive, of making false statements about Genesis’ financial health.

DCG said in its motion to dismiss the case on Wednesday that it can’t be held liable for re-sharing Genesis social media posts, such as a June 2022 tweet saying the company’s balance sheet was “strong” and its “lending business continues to meet client demand.”

DCG said there was no claim it drafted the statements, and that they were the kind of corporate optimism courts have said do not amount to fraud.

But if the case goes forward, “the facts will show all of this was true and DCG believed it to be so,” the company said.

Silbert also asked the court to dismiss the case on Wednesday, calling the allegations against him “exceedingly thin”.

Representatives for James, Gemini and Moro did not immediately reply to requests for comment.

Based in Stamford, Connecticut, DCG counts crypto asset manager Grayscale among its portfolio companies.

(Reporting by Jody Godoy in New York; Editing by Sharon Singleton)

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