A judge in New York has ruled that the majority of Letitia James’ civil securities fraud lawsuit against Digital Currency Group (DCG) and its executives can go to trial.

In 2023, James accused DCG, its CEO Barry Silbert, and the now-defunct Genesis Global Capital led by former CEO Michael Moro, of misleading investors about a significant $1 billion deficit resulting from the collapse of Three Arrows Capital (3AC).

James stated that DCG and Genesis provided deceptive reassurances through social media that they had covered Genesis’ losses when, in reality, they merely masked the shortfall with a promissory note, promising to repay $1.1 billion over ten years at an interest rate of 1%. While DCG stands by the legitimacy of this note, James’ lawsuit claims that no payments have ever been made under it.

Although both Gemini and Genesis reached settlements, DCG, Silbert, and Moro have contested the claims vigorously. In an earlier attempt, they argued that the charges were unfounded, asserting they were not involved in selling securities and should not be subject to New York securities laws. However, the presiding judge disagreed, allowing the case to proceed.

The judge also dismissed two of James’ claims against DCG, Silbert, and Moro for being duplicative in nature, specifically those alleging a first-degree fraud scheme and fifth-degree conspiracy. Despite this partial win for DCG, they maintain that they will continue to defend against the lawsuit vigorously, particularly against what they describe as James’ more extreme allegations.