Bitcoin investor Silbert speaks at a New York State Department of Financial Services virtual currency hearing in the Manhattan borough of New York
Bitcoin investor and DCG CEO Barry Silbert speaks at a New York State Department of Financial Services virtual currency hearing in the Manhattan borough of New York. Reuters

KEY POINTS

  • DCG and Silbert have asked the court to dismiss the lawsuit that supposedly had 'inaccurate' accusations
  • DCG said the New York OAG was making the company a 'scapegoat' for losses other firms caused
  • The lawsuit stems from losses investors incurred from the defunct Gemini Earn program

Venture capital company Digital Currency Group (DCG) has filed to "dismiss with prejudice" the lawsuit filed against it by New York Attorney General Letitia James, saying the allegations were "blatant mischaracterizations" of the digital currency-focused firm.

"In search of a headline-worthy scapegoat for losses caused by others, the OAG (Office of the Attorney General) wrongfully seeks to portray DCG's good-faith support of a subsidiary as participating in fraud," DCG said in a Wednesday filing.

The OAG's lawsuit stems from the collapse of Gemini Earn, a defunct program of cryptocurrency exchange Gemini that allowed customers to loan their digital assets to DCG unit Genesis, which connects institutional investors to digital asset markets.

The complaint alleges that Gemini Earn investors were defrauded out of $3 billion due to the undisclosed losses DCG, Gemini, and Genesis incurred when Three Arrows Capital (3AC) and FTX crashed.

In its latest update regarding its legal woes, DCG said that the company and its CEO Barry Silbert "filed motions to dismiss the meritless civil complaint" filed by James' office. The company also said in its dismissal filing that it contributed over a billion in cash and other assets (based on Wednesday prices) to Genesis when 3AC collapsed.

A spokeswoman for DCG told Coindesk that the billion-dollar transfer of cash and assets to Genesis, reaching some $1.4 billion, was made "at a time it had no obligation to do so." The spokeswoman also argued that the allegations about Bitcoin loans from Genesis after 3AC's collapse were "inaccurate" and "often outright false."

In Silbert's separate filing, the crypto mogul asked for the NY AG's lawsuit dismissal and asked the court to award him "such other relief as the Court may deem just and proper." The lawsuit denied that there was anything "fraudulent" about Silbert's words or actions throughout Genesis' dealings with Gemini.

The DCG CEO filing went on to criticize the New York OAG's office for pursuing the company and Silbert "instead of just suing the parties that conceived, executed, and marketed the Earn program." It reiterated that DCG had nothing to do with Genesis' lending relations with third parties such as Gemini.

The filings came a week after the New York State Department of Financial Services (NYDFS) announced Gemini has agreed to pay a $37 million fine to the state regulator in a settlement agreement wherein the exchange and custodian bank admitted it had "significant failures that threatened the safety and soundness of the company."

Gemini has also agreed to return at least $1.1 billion in digital assets to users of the Earn program, should the court handling Genesis' Chapter 11 bankruptcy case approve the settlement.

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