Genesis Global Holdco Faces Expanded NYAG Allegations Despite Settlement over Gemini Earn Case
Summary:
Genesis Global Holdco reached a proposed settlement with the New York State Attorney General's Office (NYAG) over the Gemini Earn case, only for the NYAG to file expanded allegations the next day. This new complaint names Genesis Global Holdco alongside all its co-defendants, alleging deceit of over 230,000 investors, resulting in over $3 billion in losses. Despite the settlement, the NYAG is seeking a permanent injunction against these defendants, the return of ill-gotten funds, and refunds to investors.
On February 8, Genesis Global Holdco came to a proposed resolution with the New York State Attorney General's Office (NYAG) related to the ongoing Gemini Earn dispute. However, expanded allegations against Genesis Global Holdco and its co-defendants were filed by the NYAG the subsequent day. The Genesis entity proposed a settlement to the NYAG, upon approval from New York's Southern District Bankruptcy Court, highlighting it as a result of intensive negotiations.
The agreement suggested that the NYAG's claim payments would hold parity with those of the Securities and Exchange Commission (SEC) of the United States, subject to payments of creditors. The settlement was chalked out between Genesis and the SEC for $21 million on January 31, and both settlements are to be evaluated in court on February 14.
In October, New York's Attorney General, Letitia James, accused Genesis Holdco, Genesis Global Capital, Genesis Asia Pacific, their parent company Digital Currency Group (DCG), cryptocurrency exchange Gemini, former Genesis CEO Soichiro Moro, and DCG CEO Barry Silbert of fraudulent activities linked to Gemini Earn. The NYAG claimed the parties deceived over 230,000 investors, including 29,000 New Yorkers, amounting to more than $1 billion.
On February 9, Attorney General James declared the expansion of NYAG's allegations against DCG, Silbert, and Moro after discovering more defrauded investors. The enforcement agency discovered the deceit of over 230,000 investors by these companies, resulting in losses exceeding $3 billion. Despite the earlier day's settlement, Genesis Holdco is mentioned in half of the ten causes of action in the new complaint. The claim states that Genesis Capital was falsely promoted as reliable and the Earn investment was depicted as highly liquid. In contrast, Gemini's private risk reports indicated a high default risk from Genesis Capital.
Claims regarding Genesis' over-collateralized loan book were deceptive, with a significant portion of Gemini customers' funds invested in FTX's Alameda Research. The complaint also points out Genesis' losses following Three Arrows Capital's downfall. The NYAG is pursuing a permanent injunction against these defendants, halting their operations in New York, and demand restitution of ill-gotten gains and refunds to investors.
In 2021, Genesis and Gemini collaborated on the Gemini Earn program. Following the suspension of withdrawals in November 2022, Genesis filed for bankruptcy in January 2023, triggering numerous legal actions. The SEC had filed a complaint against Genesis and Gemini in January 2023. Genesis was also sued by Gemini in July and October. Moreover, Genesis conceded to the New York Department of Financial Services on Anti-Money Laundering shortcomings and poor cybersecurity in January, resulting in the loss of its New York BitLicense.
Published At
2/9/2024 11:12:16 PM
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