The New York Attorney General Letitia James has reached a $2 billion settlement with Digital Currency Group subsidiary Genesis.
According to a press release from the Attorney General’s office, New York’s settlement with the crypto lender aims to reimburse creditors and demonstrates the “real-world consequences” caused by an apparent lack of oversight on digital assets and the crypto landscape.
Backed by Barry Silbert’s Digital Currency Group (DCG), Genesis was one of the largest crypto lenders and partnered with Gemini Exchange for a yield-bearing product called Gemini Earn.
In 2022, Genesis faced bankruptcy following the crash of Do Kwon’s Terraform blockchain ecosystem and the collapse of Sam Bankman-Fried’s FTX empire. This led to a public dispute with former business partner Gemini, which accused Genesis of defrauding hundreds of thousands of Gemini Investors.
After the conflict, AG James sued DCG, Genesis, and Gemini for $1 billion last October, alleging that the three parties deceived investors and operated without compliant disclosers for the Earn program.
Settlement terms
As crypto.news reported, James and her office sought $2 billion in a follow-up lawsuit with similar claims of violations. The settlement between New York and Genesis did not include Gemini and was previously approved by the bankruptcy court overseeing the firm’s Chapter 11 restructuring.
Furthermore, the agreement mandated a relief fund for nearly 30,000 residents believed to have deposited over $1 billion in the platform. The crypto lender is also banned from conducting business within New York’s borders.
According to the terms, Genesis neither denied or admitted claims made by AG James and the State of New York regarding fraud and investor manipulation. The company has also settled with U.S. Securities and Exchange alleging civil misconduct with Gemini Earn.
