New York Attorney General Letitia James has reached a $2 billion settlement with cryptocurrency group Genesis.
according to press release From the Attorney General's Office, New York's settlement with a cryptocurrency lender aims to compensate creditors and demonstrate the “real-world consequences” resulting from the apparent lack of oversight of the digital assets and cryptocurrency landscape.
Backed by Barry Silbert's Digital Currency Group (DCG), Genesis has been one of the largest cryptocurrency lenders and has partnered with Gemini Exchange for a yield-generating product called Gemini Earn.
In 2022, Genesis faced bankruptcy after the collapse of Do Kwon's Terraform blockchain ecosystem and the collapse of Sam Bankman-Fried's FTX empire. This led to a public feud with former business partner Gemini, who accused Genesis of defrauding hundreds of thousands of Gemini investors.
Following the dispute, AG James sued DCG, Genesis and Gemini for $1 billion last October, alleging that the three parties deceived investors and operated without compliant disclosures to the Earn program.
Settlement terms
As crypto.news reported, James and her office sought $2 billion in a subsequent lawsuit with similar allegations of abuse. The settlement between New York and Genesis did not include Gemini, and was previously approved by the bankruptcy court overseeing the company's Chapter 11 restructuring.
Furthermore, the agreement stipulates the establishment of a relief fund for nearly 30,000 residents who are believed to have deposited more than $1 billion into the platform. The cryptocurrency lender is also prohibited from doing business within New York's borders.
According to the terms, Genesis neither denied nor admitted the allegations made by AG James and the State of New York regarding fraud and manipulation of investors. The company also settled with US Securities and Exchange alleging civil misconduct with Gemini Earn.