NYAG Announces $2 Billion Settlement with Genesis

NYAG Announces $2 Billion Settlement with Genesis

FinanceFraud

By Jakub Lazurek

21 May 2024 (28 days ago)

3 min read

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New York AG announces a $2 billion settlement with Genesis to repay creditors, marking the largest cryptocurrency company settlement in state history.

On Monday, New York Attorney General Letitia James announced a significant settlement with bankrupt lender Genesis. The deal aims to repay its creditors by creating a “Victims Fund” from Genesis’ remaining assets.

The fund will receive up to $2 billion to compensate creditors if current digital asset values don’t cover their losses. This settlement follows a bankruptcy judge’s approval last Friday, despite challenges from Genesis’ parent company, Digital Currency Group (DCG).

Initially announced in February, the settlement requires Genesis to cease its business operations in New York and prohibits future activities in the state. The Attorney General’s office described this as the “largest settlement against a cryptocurrency company in state history.”

Attorney General James emphasized the importance of this settlement, stating, “This historic settlement ensures victims who invested in Genesis receive justice. It highlights the consequences of a lack of regulation in the cryptocurrency industry. New York investors deserve a properly regulated market, which my office will always work to achieve.”

The legal battle began in October last year when the NYAG sued DCG, Gemini, and Genesis. The lawsuit alleged that Gemini and Genesis coordinated two “fraudulent schemes” involving the Gemini Earn product, with DCG’s involvement.

This settlement moves Genesis closer to completing its bankruptcy proceedings. A judge approved Genesis’ liquidation plan alongside the settlement, marking a significant step towards resolving its financial issues.

The approval followed a period of contention earlier this year when DCG challenged the agreement. Despite this, the settlement was finalized, allowing the creation of the Victims Fund and setting up compensation for creditors.

The NYAG’s office stressed the settlement’s broader impact on the cryptocurrency industry. The collapse of Genesis underscores the need for stricter regulatory oversight to prevent significant financial losses for investors. This settlement aims to provide restitution and highlights the need for robust regulations in the cryptocurrency market.

Attorney General James reiterated the importance of proper regulation, saying, “New York investors deserve peace of mind from a well-regulated marketplace. My office will always strive to achieve this.” The settlement and business prohibition for Genesis in New York is crucial steps in protecting investors and ensuring market integrity.

This landmark settlement not only seeks to compensate affected creditors but also reinforces the NYAG’s commitment to holding cryptocurrency companies accountable. The alleged coordination between Gemini and Genesis, facilitated by DCG, highlights the complexities and risks in the cryptocurrency market, emphasizing the need for vigilant regulatory oversight.

As Genesis progresses towards finalizing its bankruptcy, the creation of the Victims Fund is a significant effort to address the financial harm to creditors. This development marks an important moment in regulating the cryptocurrency industry and protecting investors from fraudulent practices.

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