New York prosecutor files $3 billion fraud lawsuit against cryptocurrency firms – What happened?

New York Attorney General Expands $3 Billion Fraud Lawsuit Against Cryptocurrency Companies

Letitia James, the New York Attorney General, has taken steps to expand the lawsuit against three cryptocurrency companies to the value of $1 billion. Allegations of fraud against Digital Currency Group (DCG), Genesis Global Capital, and Gemini Trust have been tripled, reaching a total of $3 billion.

More Investors Misled by Gemini Earn Investment Program

Attorney General James reports that since filing the lawsuit against these companies last year, more investors have come forward as victims of fraud. Further investigation revealed that additional investors lost over $2 billion, bringing the total amount of fraud above $3 billion. In total, over 230,000 investors have been deceived.

Accusations of Neglecting to Inform Investors About Risks

Attorney General James has accused the companies of inadequately informing investors about the risks associated with the cryptocurrency lending program. In particular, Gemini has been accused of misleading customers by failing to disclose lending to a cryptocurrency trading firm, Alameda Research, founded by the accused fraudster Sam Bankman-Fried.

Stability of the Cryptocurrency Sector Remains a Controversial Issue

Despite fewer scandals compared to the previous year, the cryptocurrency sector is still not fully integrated into the overall financial system. The issue of stability was highlighted by a recent five-hour outage in the Web3 network, Solana blockchain. Sector representatives note that for Solana to become a blockchain for the masses, such malfunctions need to be eliminated.

It is worth noting that despite the dynamic development of the cryptocurrency sector, there are still many challenges related to security, operational transparency, and investor protection.