Letitia James, the attorney general of New York, is paying back deceived investors $2 billion through a settlement with cryptocurrency lender Genesis.
TakeAway Points:
- Letitia James, the attorney general of New York, is settling for $2 billion with cryptocurrency lender Genesis in an effort to restore the wealth of investors who were duped.
- Genesis petitioned a federal court in Manhattan late January for Chapter 11 bankruptcy protection.
- In October, James filed a lawsuit against Gemini Trust and DCG, its Genesis subsidiary, alleging that the two had deceived investors about the Gemini Earn programme, resulting in losses exceeding $1 billion.
Attorney General of New York Settles Genesis
The corporation, which was previously the backbone of the Digital Currency Group, was one of many victims of the industry-wide crisis that broke out after FTX collapsed. In January 2023, the company filed for bankruptcy under Chapter 11.
“This historic settlement is a major step towards ensuring the victims who invested in Genesis have a semblance of justice,” said James of the deal, which is the largest against a crypto firm in the state’s history.
“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,” James added.
James filed a lawsuit against DCG, its Genesis division, and Gemini Trust in October, alleging that the two had deceived investors about the Gemini Earn programme, resulting in losses exceeding $1 billion. In February, the lawsuit was expanded to include further claims that DCG and Genesis had duped investors out of over $2 billion.
The Settlement Plan
The settlement between Genesis and James’ office was part of the lender’s Chapter 11 repayment plan, which was accepted by a bankruptcy judge in spite of a legal challenge by parent firm DCG.
According to sources, Genesis does not acknowledge or refute the claims made in the case, and Gemini is noticeably left out of the agreement.
The agreement prevents Genesis from conducting business in New York. A victim’s fund consisting of at least 29,000 New Yorkers who donated over $1.1 billion to Genesis through its Gemini Earn product was also established under the settlement.
Furthermore, the Securities and Exchange Commission filed a lawsuit against Genesis and its previous partner, Gemini, for the unregistered offering and selling of securities. The bankruptcy court has also approved a separate settlement that ends this complaint.
A repayment scheme is part of the restructuring plan for users whose tokens have been frozen on the network since withdrawals were stopped in November 2022.
After the first bankruptcy payouts to creditors, any assets left in Genesis’s estate will be transferred to this fund. The state attorney’s office claims that the fund will get up to $2 billion from Genesis’ residual assets if those creditors are not compensated in full accordance with the current valuations of digital assets.
About
Genesis Global Trading, Inc. A venture capital firm formed by Barry Silbert, it is a subsidiary of the Digital Currency Group. Targeting high-net-worth individuals and institutional clients, Genesis’ business consists of companies that offer digital asset trading, financing, and custody.
