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The New York Attorney General's Office and Genesis have agreed to a settlement that will create a $2 billion Victims Fund to pay back creditors of the bankrupt crypto lender.
What's the scoop?
- The NYAG sued Genesis and Gemini in October 2023 for allegedly hiding over $1.1 billion in losses from investors. The lawsuit expanded in February 2024 to include Digital Currency Group (DCG) and additional fraud allegations involving $2 billion.
- The new settlement with Genesis, which a bankruptcy judge just approved, marks the largest against a crypto company in New York state history.
- The settlement includes funds for New York investors who lost money through the Gemini Earn program, a crypto lending product offered by Genesis and Gemini that promised over 7% APY.
- Additionally, Genesis must halt business operations in New York and is blocked from future business in the state. Per the settlement, Genesis didn’t admit to or deny the NYAG’s allegations.
Bankless take:
The court's approval of a $2 billion Victims Fund is a good step towards compensating Genesis investors, and it also signals a stricter regulatory environment for crypto firms.
Notably, this settlement is the latest domino to fall in the wake of the 2022 collapses of Three Arrows Capital and FTX, which proved to be considerable blows to Genesis and led to the firm filing for bankruptcy in January 2023. In the meantime, more dominos may drop, as the NYAG is still pursuing its lawsuit against DCG and Gemini. It remains to be seen what will happen with case, but it’s clear that New York state prosecutors won’t be backing down.
