The New York State Attorney General’s office has secured a $2 billion settlement with Genesis Global Capital, the bankrupt cryptocurrency lending platform. The settlement, approved by a federal bankruptcy judge, will establish a victims’ fund to compensate thousands of New Yorkers and other investors who lost money through Genesis’ platform.
Genesis Ordered To Pay Up To $2 Billion To Victims
New York Attorney General Letitia James announced the agreement on Monday, describing it as the largest settlement ever obtained against a cryptocurrency company by the state.
The settlement resolves claims that Genesis and its affiliates concealed over $1.1 billion in losses from investors participating in the company’s “Gemini Earn” program. Attorney General James states:
When investors suffer losses because of fraud and manipulation, they deserve to be made whole. This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice.
The settlement comes after the Attorney General’s office filed a lawsuit in October 2023 alleging that Genesis and other defendants defrauded hundreds of thousands of investors nationwide. That lawsuit was later expanded in February to target Genesis’ parent company, Digital Currency Group (DCG), its CEO, Barry Silbert, and Genesis’ former CEO, Soichiro Moro.
Under the terms of the agreement, the crypto lender will not admit to any wrongdoing. Still, the lawsuit against the remaining defendants and Genesis’ former business partner, Gemini Trust Company, will continue.
The $2 billion settlement will establish a “Victims’ Fund” to distribute payments to the firm’s creditors, including at least 29,000 New Yorkers who contributed more than $1.1 billion to the company’s Gemini Earn program.
If the assets remaining in Genesis’ bankruptcy estate are insufficient to fully compensate those creditors, the settlement requires Genesis to contribute up to an additional $2 billion to the fund.
Crypto Oversight Pledge By New York AG
Genesis’s collapse was closely linked to the high-profile downfall of crypto exchange FTX and its sister trading firm Alameda Research in late 2022. Prior to its bankruptcy, the firm had reportedly lent millions of dollars in unsecured loans to Alameda and $2.4 billion to the now-defunct crypto hedge fund Three Arrows Capital.
As Bitcoinist reported, Friday’s bankruptcy court ruling approving Genesis’ repayment plan also represents a significant step forward in the ongoing effort to recover funds for the crypto industry’s recent turmoil victims.
Attorney General James has pledged to continue her office’s work to increase oversight and regulation in the cryptocurrency space, having already secured over $2.5 billion in settlements from other predatory platforms. James concluded by stating:
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. New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve.”
Featured image from Shutterstock, chart from TradingView.com