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 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,” James said. “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 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.