DCG says it ‘cooperated for months’ with NYAG prior to lawsuit

In its third quarter shareholder letter, DCG gave updates on Grayscale, the NYAG suit and the Genesis creditor plan

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T. Schneider/Shutterstock modified by Blockworks

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Digital Currency Group said it “cooperated for months” with the New York Attorney General in its investigation prior to the lawsuit last week. 

“We were blindsided by the filing of the complaint, and there is no evidence of any wrongdoing by DCG, [CEO] Barry Silbert, or our employees, nor are there any compelling factual allegations in the complaint to establish the AG’s conclusory assertions regarding DCG,” the letter shared with Blockworks said.  

DCG said it engaged with the investigation in an “open and transparent matter,” prior to the suit. “There are no new material allegations in the complaint about DCG; this is largely a regurgitation of previously raised issues.”

The NYAG alleged that “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.” NYAG Letitia James also claimed that Gemini Earn constitutes an investment contract under the Howey test.

Outside of the lawsuit, DCG touched on the agreement in principle it reached with Genesis Creditors back in August. 

“We are pleased to report that DCG has already made ~$225 million in payments to Genesis in USD and BTC. These payments, in addition to the full early repayment of the $350 million secured term loan to Eldridge in March, brings us to ~$575 million of debt repaid since the end of 2022,” the letter said.

The company says that it’s “confident” that it can repay the remaining $50 million to Genesis

DCG, as previously reported, sees roughly 70-90% recovery for creditors in the Genesis bankruptcy, with recovery between 95-110% for Gemini Earn claims. The company “remains committed to reaching a fair outcome for all parties.”

Gemini, however, has previously pushed back against DCG’s recovery claims, alleging the company of “gaslighting” creditors. Gemini and DCG are locked in a lawsuit and were both named in the NYAG’s suit. 

As for the Grayscale updates, the company touched on the court win for Grayscale, which saw a panel of judges side with the company. Per the court, the US Securities and Exchange Commission will take the application to convert GBTC to an ETF back under consideration.

“The Grayscale team remains operationally ready to convert GBTC to an ETF upon the SEC’s approval, and the Grayscale team will share more information about potential next steps as soon as practicable,” the letter said.


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