Genesis Global Trading has settled with the NYDFS for violating anti-money laundering and fraud rules, agreeing to pay $8 million and surrender its BitLicense.
Genesis Global Trading, a crypto trading firm, and Digital Currency Group (DCG) subsidiary, has reached a settlement agreement with the New York Department of Financial Services (NYDFS) over significant compliance violations. The regulator announced on Friday that the firm will pay $8 million, forfeit its state trading license, and exit the New York market.
The settlement followed an investigation by the NYDFS that found Genesis Global Trading had failed to maintain adequate anti-money laundering and cybersecurity programs in violation of the state’s virtual currency regulations. The regulator said the firm’s compliance failures exposed the company and its customers to potential illicit activities and cyber threats.
As part of the settlement, Genesis Global Trading agreed to pay an $8 million penalty to the NYDFS, cease its operations in New York, and surrender its BitLicense, which the firm had obtained in 2018. The BitLicense is the state’s authorization for companies to engage in virtual currency activities.
“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirements and exposed the company and its customers to potential threats,” said NYDFS Superintendent Adrienne A. Harris in a statement.
The settlement is the latest blow for Genesis Global Trading, which has faced legal troubles and financial difficulties in the past year. In October 2023, New York Attorney General Letitia James filed a lawsuit against Genesis, Gemini, and DCG, accusing them of defrauding 230,000 investors of over $1 billion through the Gemini Earn program, which offered high-interest returns on crypto deposits.
In January 2023, Genesis Global Trading filed for Chapter 11 bankruptcy protection, citing liquidity issues and regulatory challenges. The firm said it had $32 million in assets and $106 million in liabilities at the time of the filing.
The settlement between Genesis Global Trading and the NYDFS highlights the challenges and risks the crypto industry faces as regulators seek to enforce compliance and consumer protection standards. The NYDFS has been one of the most active and stringent regulators of the crypto space, issuing BitLicenses to qualified firms and conducting periodic examinations of their operations.
The loss of the BitLicense means that Genesis Global Trading will no longer be able to serve customers in New York, one of the largest and most influential markets for crypto. The firm will also have to wind down its existing relationships with New York-based entities, including banks, exchanges, and custodians.
The settlement also raises questions about the future of Genesis Global Trading’s parent company, DCG, one of the most prominent and influential players in the crypto industry.
DCG owns several crypto-related businesses, including Grayscale Investments, CoinDesk, and Foundry. The legal and financial troubles of Genesis Global Trading could have implications for DCG’s reputation and operations.
