Digital Currency Group (DCG), led by Barry Silbert, has vehemently expressed defended against what it considers a baseless lawsuit filed by the New York Attorney General (NYAG).
Digital Currency Group (DCG), led by Barry Silbert, has vehemently expressed defended against what it considers a baseless lawsuit filed by the New York Attorney General (NYAG).
In a detailed response, DCG and Silbert filed motions to dismiss the civil suit, which they say is based on “a thin web of innuendo, mischaracterizations and unsubstantiated conclusions.”
The company criticized the lawsuit for its inaccuracies and misleading allegations, stating that the legal action has led to unnecessary speculation and misinformation about DCG’s operations and intentions.
They question DCG’s financial support for Génesis
At the center of the controversy, NYAG’s lawsuit accuses DCG of improperly managing its Genesis subsidiary, especially after Three Arrows Capital’s default.
DCG maintains that it has acted in good faith, highlighting its transfer of hundreds of millions of dollars to Genesis, a move it claims was above and beyond any obligation.
This financial injection was intended to support Genesis during its time of need, reflecting DCG’s belief in the future viability of Genesis and the industry as a whole.
DCG also refutes claims that it borrowed approximately 18,000 BTC from Genesis after the default, calling such allegations false and not based on factual evidence.
Alleged misrepresentations not considered fraudulent
DCG’s argument against the lawsuit also emphasizes that the alleged misrepresentations cited by the NYAG do not constitute legal fraud.
The company notes that New York courts have traditionally considered the types of statements at issue (expressions of corporate optimism or statements about financial strength) to be too subjective and lack concrete substance to be considered fraudulent.
DCG believes that its communications, including those about the strength of its balance sheet and the normal functioning of its business operations, were true and should not be the basis for allegations of fraud. This position challenges the NYAG’s effort to attribute fraudulent intent to what DCG considers routine expressions of corporate trust and operational status.
Legal rules and grounds for dismissal.
In its motion to dismiss, DCG invokes specific legal standards, arguing that the lawsuit does not meet the requirements to establish a cause of action for fraud. The company emphasizes that the complaint relies too heavily on statements that DCG retweeted or did not make, which it claims is not sufficient grounds to file fraud claims under New York law.
Additionally, DCG argues that the Martin Act claims, which form a significant part of the lawsuit, are unenforceable because the actions at issue do not meet the statute’s definitions of inducing or promoting the sale of securities or commodities.
DCG maintains that its conduct, particularly in connection with the Gemini Earn program and the loan agreements, falls outside the scope of activities regulated by the Martin Act.
