Genesis Hits the Wall with $2 Billion Settlement, Shown the Door in New York

Monday, 20/05/2024 | 19:28 GMT by Tareq Sikder

New York AG Letitia James secures settlement to aid 29,000 defrauded investors.

The AG pursues crypto oversight, having obtained $2.5 billion from various platforms so far.

New York Attorney General Letitia James has finalized a settlement worth $2 billion with the bankrupt cryptocurrency firms Genesis Global Capital, LLC, Genesis Asia Pacific PTE, LTD., and Genesis Global Holdco, LLC (collectively known as Genesis).

This settlement aims to maximize recoveries for investors who experienced financial losses. It includes the creation of a victims' fund to compensate defrauded investors, among whom are at least 29,000 New Yorkers who invested over $1.1 billion through the Gemini Earn program. Additionally, the settlement prohibits Genesis from conducting business in New York.

Settlement Reached in Genesis Bankruptcy Case

The settlement required approval from a bankruptcy court due to Genesis' bankruptcy status. It marks the largest settlement against a cryptocurrency company in New York State history. Attorney General James emphasized the importance of this settlement in providing some level of justice to the victims of Genesis' activities. The settlement continues James' efforts to enhance oversight and regulation within the cryptocurrency sector, having secured over $2.5 billion from various cryptocurrency platforms to date.

The Attorney General's office had previously filed a lawsuit in October 2023, accusing Genesis of hiding more than $1.1 billion in losses from investors. This lawsuit was expanded in February to include additional allegations of fraud involving Genesis and related entities. Under the terms of the settlement , Genesis does not admit to any wrongdoing, and the lawsuit will continue against other defendants, including Digital Currency Group, Inc. and its executives.

Victims' Fund Set Up to Compensate Creditors

The newly established Victims' Fund will distribute the remaining assets from Genesis' estate to compensate creditors. If creditors are not fully reimbursed based on current digital asset values, the fund may receive up to $2 billion from Genesis' assets to cover losses.

Attorney General James encourages New Yorkers affected by deceptive practices in virtual asset markets to report these issues to her office and urges industry workers who have witnessed misconduct to file whistleblower complaints, which can be done anonymously.