The crypto lender Genesis went bankrupt at the end of 2022 because it was too heavily invested in the also bankrupt FTX. The New York State government has filed a lawsuit against Genesis because it believes Genesis committed fraud. The public prosecutor’s office is now proposing a settlement, but is suing other companies related to Genesis through an additional application.
New dispute between US government and Genesis
The New York Attorney General, also known as NYAG, sued Genesis in October, with the case actually closing in January. Genesis was fined $8 million. The company is said to have failed to properly comply with anti-money laundering regulations and thereby served individuals who were on the Office of Foreign Assets Control (OFAC) sanctions list.
But not all disputes between NYAG and Genesis have been resolved yet. The government also believes that Genesis committed fraud by deceiving investors into believing that it was completely safe to deposit money into Genesis, even though it knew it was not.
The crypto exchange Gemini was also a customer of Genesis for its stake program Gemini Earn. Gemini itself stated that the Earn service was completely safe to use, while internal risk monitoring found that Genesis posed a major risk.
Problems continue to exist at the crypto company Genesis
In addition to Genesis, prosecutors on Friday also charged Genesis parent company Digital Currency Group (DCG), Gemini, former Genesis CEO Soichiro Moro and DCG CEO Barry Silbert. As a result of the practices surrounding Genesis, more than 230,000 New York investors are said to have lost a total of more than $3 billion, including more than $1 billion through Gemini Earn.
The government emphasizes that it is precisely these types of problems that make good crypto regulation so necessary. Unfortunately, the problems with Genesis have not yet been completely solved. Some lawsuits against the company are still pending, including bankruptcy.
Many companies are involved in this. Many exchanges used Genesis’ services for their own staking programs, such as the Dutch Bitvavo. It is still demanding money back from Genesis even though it has fully compensated users. They never noticed the problems.
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