State AG Letitia James announces $2B settlement with cryptocurrency firms
New York State Attorney General Letitia James speaks in Manhattan on Feb. 16. Credit: AP / Bebeto Matthews
ALBANY – State Attorney General Letitia James on Monday announced a $2 billion settlement with cryptocurrency firms that she had accused of defrauding 29,000 New Yorkers, including nearly 8,000 Long Islanders.
James said the settlement is with three firms: Genesis Global Capital LLC, Genesis Asia Pacific PTE LTD., and Genesis Global Holdco. New Yorkers invested in all the companies through an investment program the companies operated and named Gemini Earn. The settlement bans the Genesis companies from operating in New York State.
James called it the largest cryptocurrency settlement in state history and said it will create a victims fund, pending approval in bankruptcy court.
James had accused the companies in a lawsuit of concealing more than $1.1 billion in losses from investors. The attorney general's office had claimed that the companies conspired to “falsely represent” their capital and finances, and that public statements by company executives were “false and inaccurate” to prevent withdrawals by investors and to attract more investors.
WHAT TO KNOW
- Attorney General Letitia James says New York State has reached a $2 billion settlement with cryptocurrency firms that she had accused of defrauding 29,000 New Yorkers.
- James had accused the companies of concealing more than $1.1 billion in losses from investors to prevent withdrawals by investors and to attract more investors.
- James said the victims fund will receive remaining the cryptocurrency firms' assets after the initial bankruptcy payments to creditors.
Under the settlement, the companies don’t admit or deny allegations in the civil action brought by James.
James said at least 29,000 New Yorkers contributed to the companies’ investment program.
“This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice,” James said. “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. New York investors deserve the peace of mind that comes from a properly regulated marketplace.”
The amount of compensation for each investor isn’t yet determined. The companies and its clients and creditors are now in bankruptcy court where the companies are seeking to reorganize, pay debts and resume business operations.
“Genesis is committed to distributing all available assets to its creditors as a form of restitution,” said Sean O’Neal, one of the companies’ lawyers in the case.
James said the victims fund will receive remaining assets after the initial bankruptcy payments to creditors. She said the fund will seek to make compensation “for the full and fair amounts of their actual losses until the victims’ fund is depleted.”
James said victims can file a complaint and report to the victims’ fund at https://ag.ny.gov/investor-protection-complaint-form.
The settlement is supported by the various creditor groups that have a claim in bankruptcy court of about $2.5 billion against the companies.
She said whistleblowers can report what they claim is deceptive conduct in cryptocurrency companies anonymously at ag.ny.gov/i-want/use-whistleblower-portal.
Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.
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'A spark for them to escalate the fighting' A standoff between officials has stalled progress, eroded community patience and escalated the price tag for taxpayers. Newsday investigative editor Paul LaRocco and NewsdayTV's Virginia Huie report.
