On Monday, New York Attorney General Letitia James announced that her office has secured a $2 billion settlement with the bankrupt cryptocurrency firm Genesis Global.
This agreement comes in response to allegations that Genesis defrauded investors, including tens of thousands of New Yorkers.
$2 Billion Settlement
In a post on social media platform X, AG James revealed that this is the largest settlement against a crypto company in New York history. It aims to compensate investors who were allegedly misled and defrauded by Genesis.
My office secured $2 billion from crypto platform @GenesisTrading for lying and cheating investors. This is the largest settlement against a crypto company in New York history.
That money will go back to defrauded investors, and Genesis is also banned from operating in New York. https://t.co/tfQf1wwKu6
— NY AG James (@NewYorkStateAG) May 20, 2024
According to a press release from the Attorney General’s Office, the settlement includes the creation of a Victims’ Fund designed to aid investors misled by Genesis. The settlement terms also prohibit Genesis from conducting business in New York state.
“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” said AG James. “This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice. 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,” she added.
The Victims Fund will benefit the 29,000 New Yorkers who invested over $1.1 billion through the Gemini Earn investment program. It will be financed through distributions from Genesis’ remaining estate assets after the company’s creditors receive their initial bankruptcy payouts.
If the creditors are not fully compensated based on the current values of digital assets, the fund will receive up to $2 billion from Genesis’ remaining assets. This money will then be distributed to compensate the creditors for their actual losses until the fund is exhausted.
Billion-Dollar Fraud Lawsuit
The settlement continues Attorney General James’ efforts to increase oversight and regulation in the cryptocurrency industry. In October 2023, James sued Gemini, GenesisTrading, and DCGco, accusing them of defrauding 230,000 investors of over $1 billion.
James stated in an October 2023 X post that she was suing the crypto companies as an example of the dangers posed by an unregulated crypto industry. She claimed that these companies repeatedly assured investors their money was safe while knowing that their finances were unstable, leading to everyday New Yorkers and Americans losing millions, including their life savings.
The action followed Genesis’s Chapter 11 bankruptcy filing in 2023, which resulted in the freezing of customer withdrawals. Genesis recently received court approval last week to return $3 billion to its customers.
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