New York Attorney General's Office Reaches $2 Billion Settlement with Genesis

Compiled by: Blockchain Knight

The New York Attorney General's Office has reached a $2 billion settlement with Genesis Global Capital, a bankrupt Crypto asset 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 the Genesis platform.

New York Attorney General Letitia James announced the agreement on Monday, calling it the largest settlement ever reached in the state against a Crypto asset company.

The settlement resolves some allegations that Genesis and its affiliates concealed $1.1 billion in losses from "Gemini Earn" from project investors.

"When investors suffer losses due to fraud and manipulation, they deserve to be compensated," said Attorney General James. This historic settlement is an important step in ensuring that victims who invested in Genesis receive justice."

The settlement follows a lawsuit filed by the Attorney General's Office in October 2023, alleging that Genesis and other defendants defrauded hundreds of thousands of investors nationwide.

The lawsuit was later expanded in February to target Genesis' parent company DCG, DCG CEO Barry Silbert, and former Genesis CEO Soichiro Moro.

Under the terms of the agreement, the crypto asset lending company will not admit any wrongdoing. Nevertheless, litigation 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 company's creditors, including at least 29,000 victims who contributed more than $1.1 billion to the company's "Gemini" scheme.

The settlement requires Genesis to contribute an additional $2 billion to the fund if the remaining assets in the Genesis bankruptcy estate are insufficient to fully compensate these creditors.

Genesis’s collapse closely follows the high-profile collapse of crypto asset exchange FTX and its sister trading firm Alameda Research in late 2022.

Prior to bankruptcy, the company reportedly lent millions of dollars in unsecured loans to Alameda and $2.4 billion to the now-defunct crypto asset hedge fund Three Arrows Capital.

Friday’s bankruptcy court ruling approving Genesis’ repayment plan also represents a major step toward recovering funds for victims of the crypto asset industry.

Attorney General James has pledged to continue his office’s work to strengthen oversight and regulation of the crypto asset space, having secured more than $2.5 billion in settlements from other predatory platforms.

James concluded: "Once again, we see that the lack of oversight and regulation in the Crypto asset industry can lead to real-world consequences and harmful losses."

"New York investors should be assured of a properly regulated market, which is what my office will always work to achieve."