Digital Currency Group (DCG) has formally requested the dismissal of a lawsuit brought against it by the New York Attorney General (NY AG), Letitia James.

Filed with the New York Supreme Court, DCG’s motion seeks to counter allegations of defrauding investors and mismanaging financial disclosures related to its lending subsidiary, Genesis, and its collaboration with the crypto exchange Gemini. This legal action unfolds against heightened scrutiny and calls for regulatory clarity within the digital asset space.

Digital Currency Group Allegations and Legal Defense

The lawsuit was brought in October by NY AG Letitia James, who accused DCG and its founder and CEO, Barry Silbert, of defrauding more than 230,000 investors and causing over $1 billion in losses. This was primarily due to the activities of Genesis and its association with Gemini, primarily through the long-gone Gemini Earn program. The program, aimed at providing a high yield on cryptocurrency deposits, ended in 2022 in tandem with the general fall of the whole crypto market.

Moreover, in their defense, the legal team of DCG termed the accusations as a “thin web of baseless innuendo” and argued that the company had acted professionally per the advice from reputable accountants and investment bankers.

In particular, DCG has argued in favour of issuing a disputed $1.1 billion promissory note to Genesis, defending its legality and the propriety of the board’s approval. In addition, DCG rejects the representation of its assistance for Genesis as unlawful, stressing its adherence to legal and ethical norms.

Broadening Lawsuit Range

Since its original filing, the lawsuit’s stakes have been increasing, with the NY AG’s office filing an amended complaint with damages now estimated to be around $3 billion. The amendment was triggered by other investor complaints that pointed out a broader impact than previously thought.

The amended complaint centres on the claim that Genesis and the Gemini Earn program were underrepresented concerning risk and financial stability.

Additionally, DCG has opposed a settlement agreement between Genesis and the NY AG’s office concerning Genesis’s bankruptcy proceeding. DCG criticizes the settlement as a misrepresentation of bankruptcy law, asserting that it favours some creditors at the expense of others. This internal company wrangle demonstrates the intricate legal and financial connivances emanating from the ripple effects of the crypto market’s fall.

Regulatory Issues and Industry Reaction

The continued legal fight between DCG and the NY AG’s office highlights the broader issues that prevail in the crypto industry concerning regulatory oversight and investor protection. The case, as it develops, will provide precedents for controlling and supervising digital currency companies, especially during market turbulence.

DCG’s steadfast resistance to the accusations and its intention to go on battling them makes the regulatory engagement in the crypto space controversial. The case is being closely watched by industry observers and stakeholders, who expect it to set a precedence for other regulatory actions and the operating norms of crypto businesses.

Read Also: $BTC, $DOGE, $FET Price Analysis, as Crypto Market Rebounds From Recent Sell-Off 

The post Digital Currency Group Seeks Dismissal of NY AG’s Lawsuit appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am