June 23, 2024

New York Attorney General Secures Historic $2 Billion Settlement with Bankrupt Crypto Lender Genesis Global

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In a landmark legal victory, New York’s Attorney General Letitia James has announced a $2 billion settlement with the bankrupt cryptocurrency lender Genesis Global over allegations of defrauding thousands of investors. This settlement is the largest of its kind ever reached by New York state with a cryptocurrency company.

Genesis, which filed for Chapter 11 bankruptcy in January 2023, recently received court approval to return approximately $3 billion in cash and cryptocurrency to its customers as part of its liquidation process.

“Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry,” said Attorney General James in a statement.

James revealed that a victims fund has been established through the settlement to aid those defrauded, including at least 29,000 New Yorkers who had collectively invested over $1.1 billion in Genesis through its Gemini Earn scheme. This scheme was a key part of the lawsuit filed by James last October, in which she accused Genesis of concealing significant losses from investors.

“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” James asserted. “This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice.”

The lawsuit detailed how Genesis misled investors about the safety and stability of their investments, contributing to the financial damage suffered by many. Despite the settlement, Genesis has neither admitted nor denied the allegations put forth by the attorney general’s office.

Genesis was one of several major players in the cryptocurrency market to falter following the collapse of FTX, previously one of the world’s largest crypto exchanges. The fallout from FTX’s failure has underscored the volatility and risks inherent in the largely unregulated cryptocurrency market.

“New York investors deserve the peace of mind that comes from a properly regulated marketplace,” added James, highlighting the need for more stringent oversight and regulation in the cryptocurrency sector to prevent future fraud and manipulation.

The settlement marks a significant achievement in James’s ongoing efforts to protect investors and enforce accountability within the cryptocurrency industry. It also serves as a cautionary tale about the risks associated with investing in digital assets without adequate regulatory safeguards.

As the victims’ fund is set up and the liquidation process continues, investors and industry observers alike will be watching closely to see how this historic settlement impacts the broader cryptocurrency market and regulatory landscape.

Gerald Kelton
Digital Assets Desk

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