Attorney General James secures $2 billion settlement in latest crypto scam

May 21, 2024 Robert Abruzzese, Courthouse Editor
Attorney General Letitia James has been a nationwide leader in protecting investors and regulating the cryptocurrency industry, securing more than $550 million from firms like KuCoin, Coin Cafe, Nexo and Bitfinex, implementing sweeping legislation, and taking legal action against major industry players. Photo: Bebeto Matthews/AP
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Cryptocurrency scams have kept New York Attorney General Letitia James busy since she became the attorney general in New York, and on Monday, she announced another.

Attorney General James announced a $2 billion settlement with bankrupt cryptocurrency firms Genesis Global Capital LLC, Genesis Asia Pacific PTE LTD and Genesis Global Holdco LLC. The settlement aims to maximize recoveries for defrauded investors, including at least 29,000 New Yorkers who contributed more than $1.1 billion through the Gemini Earn investment program.

“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” said Attorney General James. “This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice. 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.”

Attorney General James filed a lawsuit in October 2023 alleging that Genesis, alongside other defendants, concealed more than $1.1 billion in losses from investors. The lawsuit expanded in February to include Digital Currency Group, Inc. (DCG), Genesis, DCG’s CEO Barry Silbert, and Genesis’ former CEO Soichiro Moro for defrauding an additional $2 billion. 

Genesis neither admits nor denies the allegations, and the lawsuit continues against the remaining defendants and former business partner Gemini Trust Company, LLC.

The settlement, requiring bankruptcy court approval, will establish a Victims’ Fund for Genesis’ creditors. The fund will receive distributions from Genesis’ remaining assets after initial bankruptcy payments. If creditors are not fully compensated based on current digital asset values, the fund will receive up to $2 billion from Genesis’ assets to cover their actual losses.

Attorney General James encourages New Yorkers affected by deceptive practices in virtual asset markets to report these issues to her office and urges industry workers to file whistleblower complaints.

James has led efforts to protect investors and regulate the cryptocurrency industry. She has secured more than $2.5 billion from predatory cryptocurrency platforms, including $22 million from KuCoin, $4.3 million from Coin Cafe, and $24 million from Nexo. Other notable actions include suing the former CEO of Celsius, issuing taxpayer notices for virtual currency investors, and directing unregistered crypto lending platforms to cease operations.

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