Genesis Global Capital Settles for $2 Billion with NY AG
The New York State Attorney General’s office has reached a $2 billion settlement with Genesis Global Capital, a crypto lending platform. This settlement, approved by a federal bankruptcy judge, will create a compensation fund for thousands of investors, including New Yorkers, who experienced losses on Genesis’ platform.
Landmark Settlement Secured
New York Attorney General Letitia James announced this groundbreaking agreement, marking the largest settlement ever obtained against a cryptocurrency firm in the state. The settlement addresses claims that Genesis concealed over $1.1 billion in losses from investors in its “Gemini Earn” program. Attorney General James emphasized the importance of ensuring investors’ justice:
When investors are victims of fraud and manipulation, they deserve restitution. This historic settlement is a significant step in providing justice to the victims who trusted Genesis with their investments.
- The AG’s office filed a lawsuit in October 2023 against Genesis for defrauding numerous investors.
- The lawsuit expanded in February to include Digital Currency Group and other defendants.
Terms of the Settlement
Despite the settlement, the crypto lender will not admit to any wrongdoing. The lawsuit against remaining defendants and Genesis’ former business partner, Gemini Trust Company, will proceed as planned. The $2 billion settlement will establish a “Victims’ Fund” to compensate creditors, including over 29,000 New Yorkers who collectively contributed more than $1.1 billion to the Gemini Earn program. If Genesis’ assets in the bankruptcy estate are insufficient to cover the creditors fully, the company must contribute an additional $2 billion to the fund.
Commitment to Crypto Oversight
The collapse of Genesis is linked to the downfall of FTX and Alameda Research in 2022. Genesis had provided loans to these ventures before its bankruptcy. Attorney General James is dedicated to enhancing oversight and regulation in the cryptocurrency space, having secured over $2.5 billion in settlements from other platforms. She emphasized the need for regulation and oversight in the industry:
Recent events demonstrate the devastating impact of a lack of oversight in the cryptocurrency sector. New York investors deserve a regulated marketplace for their peace of mind, and my office is committed to making this a reality.
Closing Thoughts
Cryptocurrency scams and fraudulent activities continue to harm investors. The $2 billion settlement with Genesis Global Capital signals a significant victory for those who fell victim to the firm’s deceptive practices. The commitment to regulating the crypto industry by the NY Attorney General sets a precedent for accountability and investor protection moving forward. Let’s stay informed and cautious in our crypto dealings to avoid falling prey to such schemes in the future.
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