NY AG Reaches $2B Settlement with Genesis for ‘Defrauded Victims’

Genesis, a subsidiary of the Digital Currency Group, and New York Attorney General Letitia James have agreed to a $2 billion settlement. 

A news release from the Attorney General’s office states that New York’s settlement with the cryptocurrency lender highlights the “real-world consequences” resulting from what appears to be a lack of control over digital assets and the cryptocurrency landscape in addition to trying to reimburse creditors.

Genesis, one of the biggest cryptocurrency lenders, teamed up with Gemini Exchange to create the yield-bearing Gemini Earn product, backed by Barry Silbert’s Digital Currency Group (DCG). 

Genesis was forced into bankruptcy in 2022 due to the demise of Sam Bankman-Fried’s FTX company and Do Kwon’s Terraform blockchain ecosystem.

This sparked a public conflict between Genesis and its former business partner Gemini, who claimed that Genesis had deceived hundreds of thousands of Gemini Investors.

AG James sued DCG, Genesis, and Gemini for $1 billion in October last year, claiming that the three had operated without providing compliant disclosures for the Earn program and had misled investors. 

Settlement Terms

As previously reported, James and her office filed a second case alleging similar crimes and requesting $2 billion. Prior to Gemini’s involvement, the bankruptcy court supervising the company’s Chapter 11 reorganization authorized the settlement between New York and Genesis.

Additionally, the accord stipulated the creation of a relief fund for approximately 30,000 citizens who are thought to have invested more than $1 billion on the platform.

The cryptocurrency lender is also prohibited from operating in New York. The agreements state that Genesis neither acknowledged nor refuted allegations of fraud and investment manipulation made by AG James and of New York.

Additionally, the business settled its claims of civil misconduct with Gemini Earn and the US Securities and Exchange.