The New York Attorney General Letitia James has made headlines with a groundbreaking $2 billion settlement with Digital Currency Group subsidiary Genesis. This settlement comes after a long legal battle surrounding the crypto lender’s alleged fraudulent activities and lack of oversight in the digital asset landscape.
Genesis, backed by Barry Silbert’s Digital Currency Group, was once a major player in the crypto lending space, partnering with Gemini Exchange for the popular yield-bearing product Gemini Earn. However, the company faced financial turmoil in 2022 following the collapse of Do Kwon’s Terraform blockchain ecosystem and Sam Bankman-Fried’s FTX empire, leading to a public dispute with Gemini over accusations of defrauding investors.
Attorney General James sued DCG, Genesis, and Gemini for $1 billion last October, citing deceptive practices and non-compliance with disclosure requirements for the Earn program. The subsequent $2 billion settlement with Genesis, approved by the bankruptcy court overseeing the firm’s Chapter 11 restructuring, includes a relief fund for thousands of residents who deposited over $1 billion into the platform.
As part of the settlement terms, Genesis is prohibited from conducting business in New York and has neither admitted nor denied the allegations of fraud and investor manipulation. The company has also settled with the U.S. Securities and Exchange Commission for civil misconduct related to Gemini Earn.
This landmark settlement serves as a cautionary tale for the crypto industry, highlighting the real-world consequences of operating without proper oversight and transparency. Attorney General James and her office are sending a clear message that they will hold companies accountable for their actions in the digital asset space.
