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Genesis Reaches Historic $2 Billion Settlement with New York Attorney General

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TL;DR

  • Genesis reaches a $2 billion settlement with the New York Attorney General to repay defrauded investors.
  • The settlement includes the creation of a Genesis Victims’ Fund to compensate over 29,000 New York investors.
  • The company will be prohibited from operating in New York and will resolve an SEC lawsuit for unregistered securities offerings.

New York Attorney General Letitia James has reached a historic $2 billion settlement with the crypto lending company Genesis. The settlement aims to repay defrauded investors.

Genesis, a subsidiary of Digital Currency Group (DCG), succumbed to the fallout from the collapse of FTX, leading it to file for Chapter 11 bankruptcy in January 2023. Letitia James initiated legal action against Genesis in October and expanded it in February, alleging that the company and its partners had defrauded investors of over $2 billion.

The settlement, the largest ever reached with a crypto company in the state. Includes the creation of a Genesis Victims’ Fund. The fund is designed to compensate over 29,000 New York investors. Who entrusted more than $1.1 billion to the company through its Gemini Earn product.

In addition to reimbursing investors, the settlement prohibits Genesis from operating in New York. This aggressive measure in terms of state regulation of the cryptocurrency market could have implications for other companies in the sector.

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Genesis Resolves Pending Issues with the SEC

The settlement also resolves a lawsuit filed by the SEC against Genesis and Gemini for unregistered securities offerings. The lawsuit alleged that the companies had misled investors about the Gemini Earn program, causing losses of over $1 billion.

As part of the company’s restructuring, a payment plan will be implemented for customers who have had tokens frozen since November 2022. The main objective is to return funds to affected investors and restore confidence and reputation in the crypto market.

The resolution reached by the court and Genesis is excellent news for investors affected by the collapse of the lending company. Additionally, it represents a relief for the crypto industry. Which manages to improve its image in the face of criticism from regulators.

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