Bankrupt cryptocurrency firm Genesis has agreed to pay $2 billion to settle claims it defrauded hundreds of thousands of investors nationwide, according to the New York State Attorney General’s Office.
The settlement, which is pending approval by a bankruptcy court, is the largest against a cryptocurrency company in state history.
“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” said New York Attorney General Letitia 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.”
Among the victims were at least 29,000 New Yorkers, according to the AG’s office.
In October 2023, James filed a lawsuit alleging that Genesis and other defendants concealed more than $1.1 billion in losses from investors that provided digital assets through a program called “Gemini Earn.” The lawsuit was later expanded to include Digital Currency Group, Inc. (DCG), Genesis, DCG’s CEO, Barry Silbert, and Genesis’ former CEO, Soichiro Moro, alleging they defrauded additional victims of another $2 billion.
According to the settlement, Genesis neither admits nor denies the allegations.
The settlement, if approved, would create a “Victims Fund” that will receive distributions from what remains of 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,” the AG’s office said.
The settlement further bans Genesis from operating in New York.
Story via TMX