A New York bankruptcy judge has approved a landmark $2 billion settlement between the New York State Attorney General’s office and the crypto lender Genesis. This settlement comes months after Genesis Global Holdco filed a motion in the U. S. Bankruptcy Court in the Southern District of New York in February seeking approval of the deal.
“When investors lose money due to fraud and manipulation, they deserve to be compensated,” said New York Attorney General Letitia James on Monday. “This historic settlement brings relief to the victims who invested in Genesis to reclaim their investment. ” James underscored that this is the largest crypto firm settlement in New York’s history.
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Terms of the Settlement and Historical Background
The settlement includes a victim fund to compensate New York investors who contributed more than $1. Genesis, through the Gemini Earn program, is valued at $ 1 billion. Genesis and Gemini introduced this program to retail investors in 2021 with attractive yields of up to 7 percent. 4 percent APY.
The New York Attorney General originally filed a lawsuit against Gemini, Genesis, and their parent company, Digital Currency Group, concerning alleged misconduct in the crypto lending program. Genesis has not denied nor admitted to the allegations in the suit, and the lawsuit will proceed with other defendants, including Gemini.
Genesis Global Holdco filed for bankruptcy in January 2023. The company’s finances suffered losses after the failure of crypto hedge fund Three Arrows Capital and crypto exchange FTX in 2022.
Repercussions on the Crypto Industry
This case highlights the legal and regulatory attention the crypto industry is facing. The strategic litigation pursued by Attorney General Letitia James is aimed at addressing fraud and manipulation in crypto firms. The fact that the New York Attorney General’s office was able to secure this sizeable settlement marks an important achievement in investor protection for the burgeoning crypto industry.
The lawsuits against Genesis also illustrate the major risks involved in crypto investments and penalties incurred due to failure to comply with rules. It is also very likely that regulatory bodies will increase their regulation as the industry grows, as it will be easier to monitor and control.
Overall, the $2 billion settlement between the New York Attorney General’s office and Genesis is a significant development in the history of cryptocurrency regulations. This historic settlement will enable affected investors to receive compensation and re-establish the importance of compliance and integrity in the cryptocurrency industry.
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