Breaking: Genesis Settles for $2 Billion with NY Attorney General
Highlights
- Genesis agrees to $2B settlement with NY AG over misleading practices.
- Victim fund established to compensate NY investors through Gemini Earn.
- Bankruptcy filing in Jan 2022 followed collapses of major crypto players.
Genesis Global Holdco has agreed to a $2 billion agreement with the New York State Attorney General’s office. This decision comes after long negotiations that emerged from accusations of misguiding financial transactions related to Genesis’s operations.
The settlement, which must be approved by a bankruptcy court due to Genesis’ bankruptcy status, is a landmark in the regulatory landscape for cryptocurrency businesses.
Genesis Settlement with NY Attorney General
Genesis’s settlement deal with the New York Attorney General, Letitia James, is one of the biggest in the state’s history of cryptocurrency regulation.
According to the terms of the agreement, the firm will establish a victim fund to pay damages to New York investors who have lost money with the Gemini Earn program. This proceeds fund will pay up to $2 billion from Genesis’ remaining assets to the affected creditors.
New York Attorney General Letitia James stated, “When investors suffer losses because of fraud and manipulation, they deserve to be made whole.” The settlement, however, does not include an admission of guilt by Genesis but permits the continuation of the legal proceedings against other involved entities, such as Gemini Trust Company, LLC.
Furthermore, as part of the agreement, Genesis will cease its operations in New York, marking a significant retreat from one of the major U.S. markets for cryptocurrencies.
Background and Legal Proceedings
The firm entered bankruptcy in January 2022 after waves of industry failures, such as Three Arrows Capital and the FTX exchange, caused the company to collapse.
However, the legal actions initiated by the New York Attorney General against Genesis and its affiliates began over issues related to the Gemini Earn program, a crypto lending platform. Investors were reportedly promised returns of up to 7.4% APY, a claim that became a central point of the lawsuit.
As a result, under the settlement, a victims’ fund is designed to indemnify defrauded investors, including at least 29,000 New Yorkers.
This settlement is part of a larger push by New York’s Attorney General to establish better oversight and regulation in the cryptocurrency area. In the last few years, Letitia James office has won over $2. 5 billion from multiple cryptocurrency platforms as a result of predatory behavior. This preventive approach seeks to protect both investors and the market, enabling digital asset companies to operate under consumer protection legal frameworks.
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