New York Attorney General Office secures $2 billion Settlement with Genesis
The Attorney General's Office of New York announced on Monday that it has reached a $2 billion settlement with Genesis to repay users affected by its bankruptcy filing in 2023.
My office secured $2 billion from crypto platform @GenesisTrading for lying and cheating investors. This is the largest settlement against a crypto company in New York history.
— NY AG James (@NewYorkStateAG) May 20, 2024
That money will go back to defrauded investors, and Genesis is also banned from operating in New York. https://t.co/tfQf1wwKu6
Genesis Global Capital, a bankrupt cryptocurrency lender, overcame a legal challenge from its corporate parent, Digital Currency Group (DCG), to get court approval for its plan to give billions of dollars in cash and digital assets to creditors. This means DCG will not receive any payouts.
Due to Genesis' prior bankruptcy filing, the settlement required review and approval by a bankruptcy court. It will create a victims fund to assist investors who were defrauded, including at least 29,000 New Yorkers who gave Genesis more than $1.1 billion through the Gemini Earn investment program.
Attorney General Letitia James filed a lawsuit in October 2023, claiming that Genesis and other defendants had concealed losses exceeding $1.1 billion from investors who had contributed digital assets through an investment program known as "Gemini Earn."
Genesis, a key player in the DCG, filed for Chapter 11 bankruptcy in January 2023 as a result of the industry-wide effects of FTX's collapse.
In February, the lawsuit was expanded to include Digital Currency Group, Inc. (DCG), Genesis, Barry Silbert, the CEO of DCG, and Soichiro Moro, the former CEO of Genesis, for defrauding additional people and organizations out of $2 billion. As a result of this settlement, Genesis neither acknowledges nor denies the claims made in the lawsuit; the case will proceed against the other defendants and Gemini Trust Company, LLC, Genesis' previous business partner.
Attorney General James stated, "Investors should be made whole when they lose money due to fraud and manipulation." "This historic settlement is a significant step toward bringing some semblance of justice to the victims who invested in Genesis." Once more, we witness the negative outcomes and real-world repercussions that can result from a lack of supervision and regulation in the cryptocurrency sector. My office will always work to ensure that New York investors have the peace of mind that comes from a properly regulated marketplace.
The official statement stated that after creditors receive initial bankruptcy distributions, Genesis's estate will transfer assets to the Victims' Fund. Depending on the current value of digital assets, this could potentially amount to $2 billion. And until the Victims' Fund is depleted, payments will be made to Genesis' creditors to cover the full and fair amounts of their actual losses. Furthermore, Genesis is banned from operating in New York.
Attorney General James has secured more than $2.5 billion from predatory cryptocurrency platforms to date in the state, and this settlement is the largest of its kind in New York’s history.
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