New York AG announces $2 billion settlement with crypto lender Genesis
NY Bans Genesis After $2B Fraud Settlement?
New York Attorney General Letitia James has reached a $2 billion settlement with crypto lender Genesis to compensate defrauded investors. This follows Genesis' bankruptcy filing and accusations of misleading investors through the Gemini Earn program, resulting in significant financial losses. The settlement, which is part of Genesis' Chapter 11 repayment plan, also prohibits the company from operating in New York and establishes a victim compensation fund.
What specific allegations did New York Attorney General Letitia James make against Genesis and its parent company DCG in her lawsuit?
New York Attorney General Letitia James made several allegations against Genesis and its parent company DCG in her lawsuit1. She claimed that the two companies misled investors about the Gemini Earn program, leading to more than $1 billion in losses1. The lawsuit was broadened in February, alleging that DCG and Genesis defrauded additional investors out of more than $2 billion1. James accused Genesis of trying to conceal more than $1.1 billion in losses, which were borne by investors. The lawsuit also charged Genesis, its former CEO Soichiro Moro, its parent company, DCG, and DCG's CEO Barry Silbert with defrauding investors and the public by trying to hide these losses1.
Can you describe the relationship between Genesis, DCG, and Gemini Trust in the context of the Gemini Earn program?
Genesis, DCG, and Gemini Trust had a collaborative relationship in the context of the Gemini Earn program. Genesis was a crypto lender and a subsidiary of Digital Currency Group (DCG). Gemini Trust, on the other hand, is a cryptocurrency exchange. The Gemini Earn program was a lending program offered by Genesis in partnership with Gemini, which allowed users to earn interest on their cryptocurrency holdings.
However, this relationship turned sour as Genesis filed for Chapter 11 bankruptcy protection in January 2023. In October, New York Attorney General Letitia James sued DCG, Genesis, and Gemini Trust, claiming that they misled investors about the Gemini Earn program, leading to more than $1 billion in losses. The lawsuit was broadened in February, alleging that DCG and Genesis defrauded additional investors out of more than $2 billion.
Despite the legal challenges, a bankruptcy court approved Genesis's Chapter 11 repayment plan, which included a settlement between the Attorney General's office and Genesis. This settlement, however, does not include Gemini. The settlement bars Genesis from operating in New York and establishes a fund for victims, which includes at least 29,000 New York residents who collectively gave more than $1.1 billion to Genesis through its Gemini Earn product.