The New York Attorney General’s office has announced that it is expanding its lawsuit against Digital Currency Group (DCG), one of the largest and most influential companies in the crypto industry, to $3 billion. The lawsuit, which was filed in September 2023, accuses DCG of engaging in fraudulent and deceptive practices that harmed investors and consumers.
According to the amended complaint, DCG misled investors about the value and performance of its crypto assets, such as Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (GETH), which are publicly traded on the OTC markets. The complaint alleges that DCG artificially inflated the prices of these trusts by creating a false scarcity of shares and manipulating the supply and demand.
DCG also allegedly failed to disclose material information about the risks and fees associated with its products, such as the high premiums and discounts, the lack of liquidity, and the potential for conflicts of interest.
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The Attorney General’s office claims that DCG’s fraudulent scheme resulted in investors losing over $2 billion in value, as the prices of GBTC and GETH plummeted in 2023. The office is seeking to recover these losses, as well as additional damages and penalties, totaling $3 billion. The office is also seeking to enjoin DCG from continuing its unlawful conduct and to impose reforms to protect investors and consumers.
DCG has denied the allegations and vowed to fight the lawsuit in court. In a statement, DCG said that it operates with the highest standards of integrity and transparency, and that it has always complied with all applicable laws and regulations. DCG also said that its products provide a valuable service to investors who want exposure to crypto assets without having to deal with the technical and regulatory challenges of buying and storing them directly.
The lawsuit against DCG is part of a broader crackdown by the New York Attorney General’s office on the crypto industry, which it considers to be rife with fraud, manipulation, and abuse. The office has previously taken action against other prominent crypto companies, such as Bitfinex, Tether, Coinseed, and BitPay, for violating various consumer protection and securities laws.
Bitcoin experienced a minor decline on Monday 12th February 2024, after posting its best weekly performance since October 2023. The leading cryptocurrency dropped by 1.2% to trade at $47,993, as some investors took profits from the recent rally.
However, the overall sentiment remains bullish, as Bitcoin has gained more than 20% in the past seven days, breaking above the $40,000 resistance level and reaching a new all-time high of $64,895 on Sunday.
What are the factors behind Bitcoin’s impressive recovery? And what are the challenges and opportunities ahead for the crypto market?
One of the main catalysts for Bitcoin’s surge was the launch of the first Spot Bitcoin exchange-traded fund (ETF) in the US, which began trading on the New York Stock Exchange on Tuesday 9th February 2024.
The ETF, called BITO, tracks the performance of Bitcoin futures contracts, rather than the spot price of Bitcoin itself. This allows investors to gain exposure to Bitcoin without having to buy or store the actual cryptocurrency, which can be costly and complicated.
The ETF also provides more regulatory clarity and legitimacy for Bitcoin, as it is overseen by the Securities and Exchange Commission (SEC) and follows strict rules and standards.
The BITO ETF attracted a huge demand from both institutional and retail investors, as it traded more than $1 billion worth of shares on its first day, making it one of the most successful ETF launches in history. The ETF also boosted the demand for Bitcoin futures contracts, which in turn pushed up the spot price of Bitcoin.
According to data from Skew, the open interest in Bitcoin futures contracts reached a record high of $27 billion on Sunday, indicating a high level of trading activity and optimism in the market.
Another factor that contributed to Bitcoin’s rally was the growing adoption and acceptance of Bitcoin by mainstream companies and institutions. For instance, Twitter announced on Thursday 11th February 2024 that it would allow its users to tip each other with Bitcoin using the Lightning Network, a layer-2 solution that enables fast and cheap transactions on top of Bitcoin.
Twitter also said that it would integrate Bitcoin into its e-commerce platform, Shop Module, which allows users to buy products directly from tweets. This move shows that Twitter is embracing Bitcoin as a form of payment and value transfer, following the footsteps of other tech giants like Facebook and PayPal.
Elon Musk has been known for his influence on the crypto market, as his tweets and comments often cause significant price swings. Moreover, Tom Brady, the star quarterback of the Tampa Bay Buccaneers and a seven-time Super Bowl champion, revealed on Saturday 11th February 2024 that he owns some Bitcoin and that he is a big fan of it. Brady also said that he thinks Bitcoin has a bright future and that he is excited to see how it evolves.