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 A New York court has <a style="color: #0000ff;" href="https://ag.ny.gov/press-release/2024/attorney-general-james-secures-settlement-worth-2-billion-crypto-firm-genesis" rel="noopener noreferrer nofollow">approved</a> a landmark $2 billion settlement between bankrupt crypto lender Genesis and the New York Attorney General’s Office (NYAG).
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The settlement will establish a fund for over 230,000 investors, including 29,000 New Yorkers, who collectively invested more than $1.1 billion in Genesis through the Gemini Earn program. Additionally, Genesis will be banned from operating in New York.
The lawsuit, <a style="color: #0000ff;" href="https://www.ft.com/content/b91e8df4-10a9-4a5b-be39-29e1c2e345d1" rel="noopener noreferrer nofollow">originally filed</a> by Attorney General James in October 2023, accused Genesis, Gemini, and Digital Currency Group (DCG) of defrauding investors by failing to disclose that Genesis’ loans were undersecured and heavily concentrated with Alameda Research.&nbsp;
The NYAG’s lawsuit, <a style="color: #0000ff;" href="https://www.reuters.com/technology/ny-attorney-general-expands-crypto-lawsuit-sees-3-bln-fraud-2024-02-09/" rel="noopener noreferrer nofollow">expanded</a> in February 2024, also targeted DCG and its CEO, Barry Silbert and Genesis’ former CEO, Soichiro Moro, for additional fraudulent activities that resulted in further losses of $2 billion.&nbsp;
Despite the settlement with Genesis, the lawsuit will continue against DCG and Gemini Trust Company, LLC.&nbsp;
DCG has <a style="color: #0000ff;" href="https://financefeeds.com/barry-silberts-dcg-objects-additional-payouts-to-genesis-creditors/" rel="noopener noreferrer nofollow">objected</a> to the settlement, arguing that it unlawfully redistributes value to preferred creditors, bypassing U.S. bankruptcy law principles. 
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 “Genesis cannot, under the guise of a ‘settlement,’ take value from lower classes and redistribute it to preferred creditors in violation of absolute priority,”
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DCG argued in its objection filed in February 2024.&nbsp;
Earlier this week, Genesis <a style="color: #0000ff;" href="https://restructuring.ra.kroll.com/genesis/Home-DownloadPDF?id1=MzEwNDQ1Nw==&amp;id2=-1" rel="noopener noreferrer nofollow">announced</a> that it would return $3 billion worth of customer assets – roughly 77% of the value of customer claims – as part of a bankruptcy liquidation plan approved by courts. However, the settlement agreement stipulates that the Victims’ Fund will receive distributions from Genesis’ remaining assets after initial bankruptcy distributions to creditors.
The settlement required approval by a bankruptcy court due to Genesis’ prior bankruptcy declaration.
The court approval of settlement is a significant victory for Attorney General Letitia James, who has been actively pursuing oversight and regulation within the cryptocurrency industry.&nbsp;
<blockquote class="pullquote align-center">
 “This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice,” 
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said Attorney General James. 
<blockquote class="pullquote align-center">
 “Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry.”&nbsp;
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Attorney General James <a style="color: #0000ff;" href="https://ag.ny.gov/press-release/2024/attorney-general-james-secures-settlement-worth-2-billion-crypto-firm-genesis" rel="noopener noreferrer nofollow">urged</a> New Yorkers affected by deceptive conduct in virtual assets markets to report these issues to her office. She also encourages industry workers who have witnessed misconduct or fraud to file anonymous whistleblower complaints.&nbsp;
<blockquote class="pullquote align-center">
 “When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” 
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said James. 
<blockquote class="pullquote align-center">
 “New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve.“
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The post <a href="https://defi-planet.com/2024/05/court-approves-2b-settlement-agreement-between-genesis-and-new-york-attorney-generals-office/" rel="noopener noreferrer nofollow">Court Approves $2B Settlement Agreement Between Genesis and New York Attorney General’s Office</a> appeared first on <a href="https://defi-planet.com" rel="noopener noreferrer nofollow">DeFi Planet</a>.

Court Approves $2B Settlement Agreement Between Genesis and New York Attorney General’s Office

DeFi Planet

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