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- 1 Genesis agrees to pay a $8 million fine and surrender BitLicense.
- 2 Accused of violations related to anti-money laundering controls.
- 3 The settlement comes amid ongoing legal troubles for Genesis.
Cryptocurrency lending firm Genesis Global Trading has reached a settlement deal with New York financial regulators over allegations that it failed to maintain proper anti-money laundering (AML) safeguards. Genesis will pay an $8 million penalty and cease operations in the state as part of the agreement.
New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris announced the settlement on Friday. According to a DFS statement, Genesis violated multiple state banking laws related to maintaining an effective AML and Office of Foreign Assets Control (OFAC) compliance program.
“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirement
s and exposed the company and its customers to potential threats,” Superintendent Harris asserted.
Genesis Made No Admission of Wrongdoing
Genesis neither admitted nor denied the DFS allegations as part of the deal. However, the firm consented to pay the $8 million fine and gave up its coveted BitLicense, allowing it to transact business with New York customers.
It said the entity named in the DFS lawsuit had ceased operations last September. It addressed the compliance issues raised before winding down for “business reasons.”
Ongoing Legal Challenges Faced by Genesis
The settlement with New York regulators comes as Genesis faces escalating legal troubles tied to its cryptocurrency lending products on multiple fronts.
In January, Genesis Global Capital — the lending arm of Genesis Global Trading — filed for Chapter 11 bankruptcy protection. It followed the stunning collapse of crypto exchange FTX, which caused Genesis to abruptly suspend customer redemptions in November amidst an industry-wide liquidity crunch.
The U.S. Securities and Exchange Commission (SEC) brought charges against Genesis the same month for the unlawful sale of crypto lending products to unaccredited investors. The regulator accused Genesis of raising over $300 million from hundreds of thousands of investors without adequately registering the securities.
Meanwhile, the New York Attorney General’s office filed a fraud lawsuit against Genesis Global Capital in October, seeking to recover over $1 billion in investor funds. The case also names Genesis parent company Digital Currency Group (DCG) and crypto exchange Gemini, run by the famous Winklevoss twins.
Whether the DFS settlement has any bearing on the ongoing federal and New York state lawsuits against Genesis and its affiliated companies remains unclear. However, the payout and loss of its BitLicense signals continued legal headwinds for the once high-flying crypto lender.
With old allies turning against it and creditors still owed billions in unpaid debts, Genesis now faces a long road to rebuild trust as it works through bankruptcy reorganization. The journey back for Genesis starts with accounting for past mistakes to regulators, so the crypto finance pioneer may someday return with better safeguards.
Conclusion
The $8 million settlement and surrendering of its BitLicense in New York marks yet another blow for the embattled Genesis Global Trading. With bankruptcy proceedings ongoing, other lawsuits pending, and its operations now halted in a major US state, the former crypto lending giant faces immense challenges. Only time will tell if Genesis can restructure and emerge from its legal troubles to regain a foothold in the digital asset industry it helped pioneer.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
