Source: bitcoinist
Compiled by: Blockchain Knight
The New York State Attorney General's Office has reached a $2 billion settlement with the bankrupt Crypto asset lending platform Genesis Global Capital.
This approved settlement by a federal bankruptcy judge will establish a victim fund to compensate thousands of New Yorkers and other investors who suffered losses through the Genesis platform.
New York State Attorney General Letitia James announced the agreement on Monday, calling it the largest settlement ever reached in the state against a Crypto asset company.
The settlement resolves some of the allegations regarding Genesis and its affiliated companies concealing $1.1 billion in losses from the "Gemini Earn" project investors.
Attorney General James stated, "When investors suffer losses due to fraud and manipulation, they deserve to be compensated. This historic settlement is an important step in ensuring that victims who invested in Genesis are treated fairly."
Before reaching the settlement, the Attorney General's Office filed a lawsuit in October 2023, accusing Genesis and other defendants of defrauding hundreds of thousands of investors nationwide.
The lawsuit later expanded in February to include Genesis's parent company DCG, DCG CEO Barry Silbert, and Genesis's former CEO Soichiro Moro.
According to the terms of the agreement, the Crypto asset lending company will not admit to any wrongdoing. However, lawsuits against the remaining defendants and Genesis's former business partner Gemini Trust Company will continue.
The $2 billion settlement will establish a "victim fund" to distribute funds to the company's creditors, including at least 29,000 victims who invested over $1.1 billion in the company's "Gemini" program.
The settlement requires Genesis to contribute an additional $2 billion if the remaining assets in the bankruptcy estate are insufficient to fully compensate these creditors.
Genesis's collapse is closely related to the high-profile collapse of the Crypto asset exchange FTX and its sister trading firm Alameda Research at the end of 2022.
Reportedly, prior to the bankruptcy, the company had extended unsecured loans of millions of dollars to Alameda and $2.4 billion to the now-dissolved Crypto asset hedge fund Three Arrows Capital.
The bankruptcy court's approval of Genesis's repayment plan on Friday represents a significant step towards recovering funds for victims in the Crypto asset industry.
Attorney General James has pledged to continue her office's work to strengthen supervision and regulation in the Crypto asset field and has obtained over $2.5 billion in settlements from other predatory platforms.
James concluded, "Once again, we see that the lack of supervision and regulation in the Crypto asset industry can lead to real-world consequences and harmful losses."
"New York investors should have confidence in a market that is properly regulated, which is the goal my office will continue to strive for."
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