Genesis to pay $2 billion to victims of alleged cryptocurrency fraud
Bankrupt cryptocurrency lender Genesis will repay $2 billion to hundreds of thousands of investors across the U.S. who were defrauded by the company, New York prosecutors said Monday.
Pending approval by a bankruptcy court, the announced settlement — the largest ever by the state against a cryptocurrency company — will establish a victims fund for investors and creditors nationwide, including at least 29,000 New Yorkers.
"This historic settlement is a major step towards ensuring the victims who invested in Genesis have a semblance of justice," New York Attorney General Letitia James said in a statement. "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."
The settlement also bars Genesis from operating in New York.
James filed suit against Genesis in October of 2023, accusing it of hiding more than $1.1 billion in losses from investors. Genesis neither admitted nor denied the allegations outlined in the lawsuit, which continues against other defendants.
Genesis filed for Chapter 11 bankruptcy protection early last year as falling prices and the collapse of FTX reverberated throughout the industry.
A court on Friday approved a Chapter 11 repayment plan by Genesis, including the settlement with James' office, while dismissing a legal challenge by Digital Currency Group, the company's corporate parent. The ruling paved the way for Genesis being able to return customer assets held on its platform since November 2022 after the collapse of other major crypto companies.
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Kate Gibson is a reporter for CBS MoneyWatch in New York.