In a dramatic turn of events, the New York Attorney General’s office, led by Letitia James, has amplified its legal pursuit of Digital Currency Group (DCG) and its sibling company Gemini Trust Co., now demanding a staggering $3 billion in damages. This legal escalation comes in the wake of a settlement with Genesis Global over allegations tied to the now-defunct Gemini Earn program.

The Escalation of Legal Demands

Merely hours following Genesis Global’s settlement with the state of New York, allegations have surfaced, suggesting a much grander scale of purported fraud involving over 230,000 investors. This revelation has prompted an upward revision of the initial $1.1 billion lawsuit filed last October, with current claims tripling based on new evidence and investor accounts.

Unpacking the Gemini Earn Controversy

The partnership between Gemini and Genesis, known as Gemini Earn, promised investors up to 8% interest on their crypto assets. However, the lawsuit alleges that these assets were invested in risky ventures, including the now-bankrupt Three Arrows Capital and Babel Finance, which resulted in a loss of over $100 million and significant financial instability for Genesis.

Allegations of Non-Disclosure

Central to the lawsuit’s claims is the accusation that Gemini, co-founded by the Winklevoss twins, failed to fully communicate the risks of their lending program. Notably, the lack of transparency regarding substantial loans made to Alameda Research, the firm owned by the now-infamous Sam Bankman-Fried, is under scrutiny.

A Ripple Effect of Financial Woes

The lawsuit furthers the assertion that both Genesis and DCG may have deliberately obscured the true extent of their financial predicaments from their investors. This action has drawn attention to the broader implications of trust and transparency in the crypto lending space, especially following the high-profile collapse of FTX.