(Bloomberg) -- Barry Silbert and his Digital Currency Group are seeking to be dismissed from New York state’s $3 billion civil lawsuit over a failed crypto lending program, saying their alleged role in the matter rests on a “thin web of baseless innuendo.”

The suit accuses DCG and Silbert of misleading customers about the safety of the now-defunct program, called Gemini Earn — a venture between DCG’s Genesis Global Capital unit and crypto exchange Gemini Trust Co., founded by Tyler and Cameron Winklevoss. The brothers aren’t named in the suit.

In a filing Wednesday in Manhattan, DCG said it should be dropped from the case, arguing that its only connection to the alleged fraud against Gemini Earn customers boils down to “vague” statements and a few “retweets” surrounding its effort to support Genesis during the 2022 crypto crisis.

“If this case proceeds, the facts will show that DCG did nothing wrong, and that it acted properly, with the best of intentions, based on the sound, considered advice of accountants, investment bankers, consultants and other advisors from elite firms with the highest of reputations,” DCG said in the filing.

A representative for New York Attorney General Letitia James, who filed the suit, referred on Wednesday to an earlier statement about the case, in which the state said it had “pulled the curtain back” on DCG.

Adding Billions

The suit was initially filed in October seeking $1.1 billion. It was amended in February to seek another $2 billion in restitution after James said additional victims came forward to claim they were misled about the safety of their investments. The amended suit didn’t include new allegations against Gemini.

The state accuses Gemini and Genesis of failing to disclose to investors the risks of Gemini Earn, which they started in 2021. In February, Genesis Global Holdco LLC, the holding company for the DCG unit, settled with the state, which claimed the bankrupt crypto lender had defrauded Gemini Earn customers.

Gemini Earn purported to generate as much as 8% interest for customers by allowing Genesis to lend their crypto assets to third parties. But the value of the lending program’s assets collapsed in 2022 amid several high-flying bankruptcies, including Sam Bankman-Fried’s FTX.

Genesis had more than $1 billion invested in Three Arrows Capital, a hedge fund that failed in mid-2022, leaving a hole in Genesis’ balance sheet, New York said in its suit. Around the same time, Genesis lost more than $100 million from another borrower, Babel Finance, according to the state.

‘Laser Focused’

Silbert said in a separate motion to dismiss on Wednesday that the lawsuit failed to allege he made misrepresentations to anyone or that he had any involvement in how Genesis spoke publicly about DCG’s financial obligations to it.

“Rather, the documents underpinning the amended complaint reveal that at all times Mr. Silbert was laser focused on trying to support Genesis during the turmoil impacting the cryptocurrency markets in 2022, consistent with his obligations to DCG and its shareholders,” according to the filing. “There is nothing fraudulent about Mr. Silbert’s words or actions.”

Silbert also complained that the state sued without interviewing him first, preventing him from giving what he describes as reasonable explanations for what happened. In a footnote of his filing, he said he missed a scheduled interview in September because his 9-year-old daughter had been diagnosed with cancer. The interview was rescheduled for November, but the state “nonetheless raced ahead with filing suit” before the meeting, he said.

Defendants don’t have to be interviewed before they are sued.

The case is New York v. Gemini Trust Co., 452784/2023, New York State Supreme Court, New York County (Manhattan).

(Adds argument about interview in last section.)

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