Crypto Firm Genesis Global Holdco Settles NY Fraud Suit, SEC Charges

Crypto Firm Genesis Global Holdco Settles NY Fraud Suit, SEC Charges

Crypto News – Genesis Global Holdco, a bankrupt cryptocurrency firm, has reached a settlement with the New York Attorney General’s Office following a lawsuit filed last year alleging fraud amounting to over $1 billion against New Yorkers.

In a motion filed on Thursday in the U.S. Bankruptcy Court in the Southern District of New York, Genesis Global Holdco sought approval from the judge for the settlement.

“After months of rigorous negotiation, the Debtors and NYAG have reached a resolution of the NY Action,” Genesis stated in a court filing.

The lawsuit, initiated by New York Attorney General Letitia James in October, targeted Gemini, Genesis, and its parent company Digital Currency Group, focusing on a Gemini crypto lending program introduced in 2021. The program, advertised to retail investors, claimed to offer up to 7.4 percent APY.

The settlement, announced on Thursday, aims to spare the debtors from “substantial litigation expenses” and enables them to concentrate on maximizing recoveries for creditors. Notably, the NYAG has agreed to accept payment under the Settlement Agreement only if all general unsecured creditors of the Debtors are fully compensated, as outlined in the court filing.

In addition to the NYAG settlement, Genesis Global Holdco recently resolved a lawsuit brought forth by the Securities and Exchange Commission (SEC), agreeing to pay $21 million in damages.

The SEC’s lawsuit accused Genesis of conducting an unregistered securities offering through the Gemini Earn program, purportedly raising “billions of dollars” worth of crypto from numerous investors. Allegations against Genesis included a lack of sufficient liquid assets to cover withdrawal costs, leaving investors stranded after a year into the program. New York’s Attorney General James further claimed that Genesis concealed $1.1 billion in losses.

Genesis Global Holdco’s bankruptcy filing in January 2022 came in the wake of financial setbacks following the collapses of cryptocurrency hedge fund Three Arrows Capital and cryptocurrency exchange FTX in the same year.