New York Attorney General Achieves $2 Billion Settlement with Defunct Crypto Lender Genesis for Affected Parties

The Attorney General of New York has announced the acquisition of $2 billion from the insolvent cryptocurrency company Genesis Global to assist in compensating defrauded victims.

In a statement, the New York Attorney General indicated that the settlement will be utilized to establish a “victim’s fund” aimed at aiding defrauded investors. This fund will provide payouts to at least 29,000 residents of New York, who invested over $1.1 billion in Genesis via the Gemini Earn investment program. Additionally, Genesis has been prohibited from operating in New York in the future.

Largest Settlement Against a Crypto Firm in New York

The $2 billion settlement marks the most significant action taken against a cryptocurrency firm in the history of New York state. In light of this, the New York Attorney General announced plans to enhance oversight and regulation of the digital assets sector, which has thus far recovered over $2.5 billion from exploitative crypto platforms.

“This landmark settlement represents a significant advancement toward providing the victims who invested in Genesis with a measure of justice,” stated Letitia James, the Attorney General of New York.

“Once again, we observe the tangible repercussions and severe losses that can arise from insufficient oversight and regulation within the cryptocurrency sector. Investors in New York deserve the assurance that comes from a well-regulated marketplace, and that is a goal my office will consistently strive to achieve,” Attorney General James further remarked.

Attorney General James is encouraging New Yorkers impacted by fraudulent activities in the cryptocurrency domain to report these matters, and those who have observed misconduct or fraud to submit an online whistleblower complaint.

DCG’s Legal Challenge Rejected

In February, Digital Currency Group (DCG) contested the bankruptcy plans of its subsidiary Genesis, claiming that they were unlawful and favored a limited group of creditors. In a court submission, the company requested that the court reject the Revised Plan proposed by Genesis for several reasons, including breaches of the Bankruptcy Code as the protracted process continues.

In May, Judge Lane dismissed DCG’s legal challenge, asserting that Genesis’ parent company did not possess the authority to challenge the Chapter 11 plan. As a shareholder of Genesis, DCG is last in line for repayment, according to Judge Lane. The judge emphasized that creditors are prioritized over DCG and are not receiving full repayment.

In February, Genesis obtained approval to liquidate its Grayscale Bitcoin Trust (GBTC) shares valued at over $1.3 billion, as part of its efforts to reimburse customers.

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