Genesis Global has successfully resolved the lawsuit concerning accusations of customer cryptocurrency fraud amounting to $1 billion in New York.

A subsidiary of Digital Currency Group. Genesis Global has come to terms with a lawsuit brought forth by New York's Attorney General, Letitia James, who accused the insolvent cryptocurrency lender of deceiving clients who participated in the now-defunct Gemini Earn initiative, which was run in partnership with Gemini Trust Co.

On February 14, Genesis is set to request a bankruptcy judge's approval for its proposed plan to repay debts.

In October 2023, New York’s Attorney General, Letitia James, filed a legal action against Genesis Global, its parent company Digital Currency Group, and Gemini, alleging they deceived investors out of more than $1 billion. lawsuit The lawsuit aims for compensation for investors, the recovery of unlawfully gained profits, and a prohibition against all three companies from engaging in financial activities within New York.

Nevertheless, the settlement announced in New York court today specifically addresses the accusations against Genesis, as detailed in court records.

Additionally, the arrangement with Attorney General James will reallocate assets previously intended for state entities to former customers of the Earn program and other creditors of Genesis. This agreement awaits approval from a bankruptcy judge, following an earlier resolution concerning the Earn initiative from the US Securities and Exchange Commission (SEC). bankruptcy Although the companies maintain they acted appropriately, Genesis has chosen to resolve the claims without acknowledging any wrongdoing. Furthermore, the company has pledged to discontinue its operations in New York while it continues its liquidation process.

Potential Bitcoin Repayment for Genesis Creditors

Authorities in New York have suggested that Genesis creditors should be prioritized in the Chapter 11 repayment hierarchy, regardless of whether repayments are made in cryptocurrency or traditional currency, as per Bloomberg's report. Genesis has proposed offering tokens, including Bitcoin, to affected clients; however, a judge might require cash repayments.

Moreover, key creditors of Genesis have consented to updated asset valuation methods, recognizing the increased market value of digital currencies since the Chapter 11 filing in January 2023. This approach contrasts with other cryptocurrency firms that assessed their assets based on valuations at the time of their bankruptcy filings.

Digital Currency Group is contesting Genesis' proposed liquidation strategy, citing concerns over biased treatment of certain creditors under Chapter 11. Operating independently in bankruptcy, Genesis aims to seek judicial approval for both the New York settlement and its liquidation strategy from Judge Sean Lane on February 14. Bitcoin The Earn program, which faced criticism from the SEC for offering unregistered securities, allowed users to accrue interest by lending their cryptocurrency. James has accused Gemini of failing to adequately disclose risks associated with the Earn program and alleged that Genesis and Digital Currency Group attempted to hide over $1 billion in losses after the collapse of the cryptocurrency hedge fund Three Arrows Capital—claims that the companies categorically reject.

US Securities and Exchange Commission

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Kumar is a seasoned tech journalist focusing on the dynamic intersections of artificial intelligence, marketing technology, and emerging areas like crypto, blockchain, and NFTs. With over three years in the field, Kumar has built a strong reputation for crafting engaging narratives, conducting deep-diving interviews, and providing thorough insights. His expertise lies in creating impactful content—articles, reports, and research publications—for leading industry platforms. With a unique blend of technical acumen and storytelling, Kumar excels at making complex technological topics accessible and engaging for a diverse audience. digital assets Enso, LayerZero, and Stargate Collaborate to Enable One of the Largest Liquidity Migrations in Ethereum to Unichain.