New York Attorney General Letitia James has reached a groundbreaking settlement with the cryptocurrency lender Genesis to redress defrauded investors. This comes after Genesis, formerly at the forefront of the Digital Currency Group, was ensnared in the wider industry fallout triggered by the FTX collapse.
Their financial woes resulted in a Chapter 11 bankruptcy filing in January 2023. This settlement is the largest against a crypto firm in New York state’s history and involves huge financial reparations.
New York Gets Justice for Investors
As part of the settlement, a dedicated victims’ fund will be established to aid those defrauded. This initiative will specifically assist over 29,000 New Yorkers who invested more than $1.1 billion through the Gemini Earn program.
“This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice.”
Attorney General Letitia James
The settlement also imposes a strict ban on Genesis operating in New York, reinforcing the state’s commitment to protecting its citizens from predatory financial practices in the cryptocurrency industry.
Also read: Genesis Sells GBTC Shares for 32,041 Bitcoins Amid Bankruptcy
Furthermore, the resolution was achieved after the bankruptcy court reviewed and approved the settlement, acknowledging the necessity of such measures to rectify the widespread financial damage inflicted on investors. When investors suffer losses because of fraud and manipulation, they deserve to be made whole, Attorney General James stated.
New York to Continue Fighting Against Crypto Fraud
The settlement not only compensates the victims but also lays the groundwork for increased regulatory scrutiny in the industry. In her statement, Attorney General James highlighted the real-world consequences of insufficient oversight and regulation within the cryptocurrency industry, and her resolve to establish a properly regulated marketplace for New York investors.
This legal victory is part of a broader crackdown on fraudulent activities in the crypto market. In October 2023, Attorney General James initiated a lawsuit against Genesis and other defendants for concealing more than $1.1 billion in losses from investors involved in the Gemini Earn program.
Also read: Genesis Global to Pay $21 Million Civil Penalty in SEC Settlement
The Victims’ Fund will distribute payments from the remaining assets of Genesis after the initial bankruptcy distributions. If these assets are insufficient to fully compensate the creditors, the fund will use up to $2 billion from Genesis’ remaining assets to ensure full recovery of losses.
This structured compensation mechanism underlines the commitment of the Attorney General’s office to not only address current injustices but to deter similar misconduct in the future.
Attorney General Makes a Call to Action
Attorney General Letitia James continues to encourage New Yorkers affected by deceptive practices in virtual asset markets to report these issues to the Office of the Attorney General (OAG). She also urges industry insiders who have witnessed misconduct or fraud to come forward and file whistleblower complaints, which can be submitted anonymously.
Under James’ leadership, the OAG has been at the forefront of enforcing crypto regulations and securing substantial settlements from entities that have skirted legal boundaries. Past actions include securing over $22 million from KuCoin and $4.3 million from Coin Cafe, among others.
Cryptopolitan reporting by Jai Hamid
