Silbert's DCG Challenges NYAG's Lawsuit as Baseless
Digital Currency Group (DCG), led by Barry Silbert, has vehemently defended itself against what it deems a baseless lawsuit filed by the New York Attorney General (NYAG).
In a detailed response, DCG and Silbert have filed motions to dismiss the civil lawsuit, which they argue is built on "a thin web of innuendo, mischaracterizations, and unsupported conclusions."
The company has criticized the lawsuit for its inaccuracies and misleading allegations, stating that the legal action has sparked unnecessary speculation and misinformation about DCG's operations and intentions.
DCG's financial support to Genesis questioned
At the heart of the controversy, the NYAG's lawsuit accuses DCG of improperly managing its subsidiary, Genesis, especially after the default of Three Arrows Capital.
DCG contends 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 infusion was aimed at supporting Genesis during its time of need, reflecting DCG's belief in Genesis' future viability and the broader industry.
DCG also refutes claims of borrowing approximately 18,000 BTC from Genesis after the default, labeling such allegations as false and not based on factual evidence.
Alleged misrepresentations not deemed fraudulent
DCG's argument against the lawsuit also stresses that the alleged misrepresentations cited by the NYAG do not constitute fraud legally.
The company points out that New York courts have traditionally found the types of statements in question—expressions of corporate optimism or statements regarding financial strength—to be too subjective and lacking concrete substance to be considered fraudulent.
Mushumir ButtDCG believes that its communications, including those about its balance sheet being strong and its business operations running normally, were true and should not be basis for allegations of fraud. This stance challenges the NYAG's effort to attribute fraudulent intent to what DCG considers routine expressions of corporate confidence and operational status.
Legal standards and dismissal grounds
In its motion to dismiss, DCG invokes specific legal standards, arguing that the lawsuit fails to meet the requirements for stating 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 argues are insufficient grounds for fraud claims under New York law.
Furthermore, DCG argues that the Martin Act claims, which form a significant part of the lawsuit, are inapplicable because the actions in question do not meet the statute's definitions of inducing or promoting the sale of securities or commodities.
DCG maintains that its conduct, particularly in relation to the Gemini Earn Program and loan agreements, falls outside the scope of activities regulated by the Martin Act.
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