Source: bitcoinist
Compiled by: Blockchain Knight
The New York Attorney General’s Office has reached a $2 billion settlement with bankrupt Crypto asset lending platform Genesis Global Capital.
The settlement, approved by a federal bankruptcy judge, will establish a victims fund to compensate thousands of New Yorkers and other investors who lost money through the Genesis platform.
New York Attorney General Letitia James announced the agreement on Monday, calling it the largest settlement ever reached in the state against a crypto asset company.
The settlement resolves allegations that Genesis and its affiliates concealed $1.1 billion in losses from “Gemini Earn” from investors in the project.
“When investors suffer losses due to fraud and manipulation, they deserve to be compensated,” said Attorney General James. “This historic settlement is an important step toward ensuring justice for the victims who invested in Genesis.”
The settlement follows a lawsuit filed by the Attorney General’s Office in October 2023 alleging that Genesis and other defendants defrauded hundreds of thousands of investors nationwide.
The lawsuit was later expanded in February to target Genesis' parent company DCG, DCG CEO Barry Silbert and former Genesis CEO Soichiro Moro.
Under the terms of the agreement, the crypto asset lending firm will not admit any wrongdoing. Nevertheless, litigation against the remaining defendants and Genesis’ former business partner, Gemini Trust Company, will continue.
The $2 billion settlement will establish a "victims fund" to distribute payments to the company's creditors, including at least 29,000 victims who contributed more than $1.1 billion to the company's "Gemini" program.
The settlement requires Genesis to contribute an additional $2 billion to the fund if the remaining assets in the Genesis bankruptcy estate are insufficient to fully compensate those creditors.
Genesis’s collapse closely ties in with the high-profile collapse of crypto asset exchange FTX and its sister trading firm Alameda Research in late 2022.
Prior to its bankruptcy, the company reportedly lent millions of dollars in unsecured loans to Alameda and $2.4 billion to the now-defunct crypto asset hedge fund Three Arrows Capital.
Friday’s bankruptcy court ruling approving Genesis’ repayment plan also represents an important step toward recovering funds for victims of the crypto asset industry.
Attorney General James has pledged to continue his office’s work to increase oversight and regulation of the crypto asset space, having already secured over $2.5 billion in settlements from other predatory platforms.
James concluded: “Once again, we see that the lack of oversight and regulation in the Crypto asset industry can lead to real-world consequences and harmful losses.”
"Investors in New York deserve the assurance of a properly regulated marketplace, which is what my office will always work to achieve."
