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AG James Announces $2 Billion Deal with Cryptocurrency Firms
ALBANY – State Attorney General Letitia James announced a $2 billion settlement Monday with cryptocurrency companies she accused of defrauding 29,000 New Yorkers, including nearly 8,000 Long Islanders.
James said the deal is with three companies: Genesis Global Capital, LLC, Genesis Asia Pacific PTE, LTD. and Genesis Global Holdco. New Yorkers invested in all the companies through an investment program run by the companies called Gemini Earn. The settlement prohibits Genesis companies from operating in New York state.
James called it the largest cryptocurrency settlement in state history and said he would create a fund for victims, pending bankruptcy court approval.
James had accused the companies in a lawsuit of hiding losses of more than $1.1 billion from investors. The attorney general’s office had alleged that the companies conspired to “misrepresent” their capital and finances, and that public statements by company executives were “false and inaccurate” to prevent investor withdrawal and to attract more investors.
Under the agreement, the companies neither admit nor deny the allegations in James’ civil suit.
James said at least 29,000 New Yorkers have contributed more than $1 million to the companies’ investment program.
“This historic settlement is an important step toward ensuring that victims who invested in Genesis have some semblance of justice,” James said. “Once again, we see the real-world consequences and harmful losses that can occur due to the lack of oversight and regulation in the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated market.”
The amount of compensation for each investor is not yet determined. The companies, their customers and creditors now find themselves in bankruptcy court where the companies are trying to reorganize, pay debts and resume business operations.
“Genesis agrees to distribute all available assets to its creditors as a form of restitution,” said Sean O’Neal, one of the lawyers for the companies involved in the case.
James said the victims’ fund will receive the remaining assets after the bankruptcy’s initial payments to creditors. He said the fund would seek to compensate “the full and fair amount of their actual losses until the victims’ fund is exhausted.”
James said victims can file complaints and report to the victims’ fund at https://ag.ny.gov/investor-protection-complaint-form.
The deal is backed by various groups of creditors who are owed about $2.5 billion to the companies in bankruptcy court.
He said whistleblowers can anonymously report what they believe to be deceptive conduct at cryptocurrency companies https://ag.ny.gov/i-want/use-whistleblower-portal.
Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He’s been covering Albany since 2001.