New York’s attorney general secured a $2 billion settlement with bankrupt cryptocurrency lender Genesis Global over allegations that it defrauded thousands of investors.
Genesis, which filed for Chapter 11 bankruptcy in the US in January 2023, received court approval last week to return about $3 billion in cash and cryptocurrency to its customers in a liquidation.
“Once again, we see the real-world consequences and detrimental losses that can occur due to the lack of oversight and regulation within the cryptocurrency industry,” said New York Attorney General Letitia James.
On Monday, James announced a victims’ fund, established through the settlement, to “help defrauded investors,” including at least 29,000 New Yorkers who are said to have contributed more than $1.1 billion to Genesis through his Gemini Earn plan. James said it was the largest deal New York state had ever reached with a cryptocurrency company.
“When investors suffer losses due to fraud and manipulation, they deserve to be compensated,” James said. “This historic settlement is an important step in ensuring that the victims who invested in Genesis have some semblance of justice.
James first filed a lawsuit against Genesis last October, accusing it of having hidden losses from investors who provided digital assets through Gemini Earn. Under the agreement, the firm has neither admitted nor denied the allegations.
Genesis was one of several cryptocurrency victims caught in the collapse of FTX, which had been one of the largest exchanges in the world.
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“New York investors deserve the peace of mind that a properly regulated market provides,” he added.