Genesis Banned from Operating in New York.
New York Attorney General Letitia James secured a settlement worth $2 billion with bankrupt cryptocurrency firms Genesis Global Capital, LLC, Genesis Asia Pacific PTE, LTD., and Genesis Global Holdco, LLC (Genesis) that will help maximize recoveries for investors who were defrauded. The settlement, which required review and approval by a bankruptcy court due to Genesis’ previous bankruptcy declaration, will establish a victims fund to help defrauded investors, including at least 29,000 New Yorkers, who contributed more than $1.1 billion to Genesis through the Gemini Earn investment program. Additionally, the settlement bans Genesis from operating in New York. The settlement, the largest against a cryptocurrency company in state history, continues Attorney General James’ work to increase oversight and regulation in this industry and protect New York investors, which has secured more than $2.5 billion from predatory cryptocurrency platforms to date.
“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” said Attorney General 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. New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve.”
The settlement, which required bankruptcy court approval, will create a “Victims’ Fund” for Genesis’ creditors and resolves Attorney General James’ claims against Genesis for defrauding hundreds of thousands of investors nationwide, including at least 29,000 New Yorkers. In October 2023, Attorney General James filed a lawsuit alleging that Genesis, along with other defendants, concealed more than $1.1 billion in losses from investors that provided digital assets through an investment program called “Gemini Earn.” That lawsuit was expanded in February against Digital Currency Group, Inc. (DCG), Genesis, DCG’s CEO, Barry Silbert, and Genesis’ former CEO, Soichiro Moro, for defrauding additional individuals and institutions of an additional $2 billion. Under this settlement, Genesis neither admits nor denies the allegations of this lawsuit, and the suit will continue against the remaining defendants, as well as Genesis’ former business partner, Gemini Trust Company, LLC.
The Victims’ Fund established through this settlement between the Office of the Attorney General (OAG) and Genesis will receive distributions from the assets remaining in Genesis’ estate after initial bankruptcy distributions to creditors. If those creditors are not made whole based on today’s digital asset values, the Victims’ Fund will receive up to $2 billion from Genesis’ remaining assets. The Victims’ Fund will then make distributions to compensate Genesis’ creditors for the full and fair amounts of their actual losses until the Victims’ Fund is depleted.
Attorney General James urges New Yorkers who have been affected by deceptive conduct in virtual assets markets to report these issues to OAG. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.
Attorney General James has been a nationwide leader in the effort to protect investors and rein in the cryptocurrency industry. Attorney General James announced sweeping cryptocurrency legislation that would increase regulations of the cryptocurrency industry to protect New York investors. In December 2023, Attorney General James secured more than $22 million from KuCoin, one of the largest cryptocurrency trading platforms, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. In May 2023, Attorney General James secured $4.3 million from Coin Cafe for failing to register as a commodity broker-dealer and defrauding investors. In January 2023, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally. Attorney General James also sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition. In March 2022, Attorney General James issued a taxpayer notice to virtual currency investors and their tax advisors to accurately declare and pay taxes on their virtual investments.
In October 2021, Attorney General James directed unregistered crypto lending platforms to cease operations for not registering with the state. In September 2021, Attorney General James and the U.S. Securities and Exchange Commission recovered $479.9 million from GTV Media for failing to register cryptocurrency sales. Also in September 2021, Attorney General James secured a $3 million court judgment against Coinseed. In February 2021, Attorney General James required Bitfinex and Tether to end all trading activity in New York and required iFinex and Tether and their related companies to pay $18.5 million in penalties.
This lawsuit is being handled by Assistant Attorneys General Geoffrey Andreu and John Ruth and Senior Enforcement Counsel Gabriel Tapalaga of the Investor Protection Bureau, with assistance from Principal Accountant Shalendra Ramadhin and Legal Assistant Eddie Aguilar, also of the Investor Protection Bureau, and Detective Investigator Frank Tirri of the Investigations Division. Complex data analysis was provided by Data Analyst Anushua Choudhury, under the supervision of Acting Deputy Director Gautam Sisodia of the Division of Research and Analytics, which is led by Director Victoria Khan. The Investor Protection Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo. The Division of Economic Justice is led by First Deputy Attorney General Jennifer Levy.
