DCG, Barry Silbert file motions to dismiss NYAG suit

DCG and Silbert said the suit was an attempt to find a “headline-worthy scapegoat”

share

Digital Currency Group and CEO Barry Silbert filed motions to dismiss in the New York Attorney General’s case against Gemini, Genesis, DCG and Silbert on Wednesday morning. 

DCG argued in the filing that the allegations against the company are “plainly deficient.”

“As we have stated from the beginning, the allegations are a thin web of baseless innuendo, blatant mischaracterizations and unsupported conclusory statements,” DCG said in a statement to Blockworks.

The company pushed back against prior claims that the Gemini Earn loan agreements fall under the definition of securities under Howey. DCG argued that the claims fail to establish a third element, which would be necessary for the agreements to be considered securities

Both the Securities and Exchange Commission and the NYAG alleged that the Earn program operated as an investment contract.

“If this case proceeds, the facts will show that DCG did nothing wrong, and that it acted properly, with the best of intentions, based on the sound, considered advice of accountants, investment bankers, consultants and other advisors from elite firms with the highest of reputations,” DCG claimed in the filing.

DCG said it “invested hundreds of millions of dollars” into Genesis after Three Arrows Capital collapsed

Read more: DCG calls NYAG, Genesis settlement agreement ‘subversive’

“This is in addition to the $1.1 billion promissory note, which is a binding obligation, properly vetted and endorsed by DCG’s board of directors, accountants and other advisors that DCG remains committed to,” DCG said in a statement.

Silbert’s filing echoes a similar sentiment. The CEO’s legal team argued that he is not “alleged to have made any misrepresentations to anyone, nor to have had any involvement in how Genesis accounted for (or represented to others) DCG’s financial obligations to Genesis.” 

DCG and Silbert’s statement said the lawsuit was an attempt by the NYAG to find a “headline-worthy scapegoat for losses caused by others.”

The NYAG initially filed the suit against the group in October of last year. Gemini and Genesis were accused of conspiring on two “fraudulent schemes” with the Gemini Earn product. DCG was accused of coordinating with the two to perpetuate the scheme.

“The Genesis Entities, [Michael] Moro, DCG and [Barry] Silbert disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions and concealment,” the complaint alleged. 

Last month, the NYAG announced that she was seeking $3 billion in restitution from Gemini and DCG for the alleged fraud. Bankrupt lender Genesis announced a settlement with the AG’s office, though DCG has since contested the settlement. 

“Genesis’s proposed ‘settlement’ with the New York Attorney General is a back-door attempt to circumvent US bankruptcy law,” DCG said in a statement late last month.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Research Report Templates (1).png

Research

Solana Mobile is a highly ambitious foray into the mobile consumer hardware market, seeking to open up a crypto-native distribution channel for mobile-first applications. The market for Solana Mobile devices has demonstrated a phenomenon whereby external market actors (e.g. Solana-native projects) continuously underwrite subsidies to Mobile consumers. The value of these subsidies, coming in the form of airdrops, trial programs, and exclusive NFT mints, have consistently covered the cost of the phone and generated positive returns for consumers. Given this trend in subsidies, the unit economics in the market for Mobile devices, and the initial growth rate and trajectory of sales, it should be expected that Solana mobile can clear 1M to 10M units over the coming years. As more devices circulate amongst users, Solana Mobile presents a promising venue for the emergence of killer-applications uniquely enabled by this mobile-first, crypto-native distribution channel.

article-image

Crypto’s Wild West era is over — it’s time to embrace regulation to secure the future of digital assets

article-image

Plus, Solana has now surpassed Ethereum in trailing 30-day decentralized exchange volume

article-image

Polymarket betters say Kamala Harris has better odds than Biden of winning against Trump

article-image

Bitcoin’s down Tuesday, while ETH-correlated assets like ENS and ARB see growth

article-image

Plus, let’s check on the nine ether ETFs now trading on US exchanges