Following a recent $2 billion settlement with cryptocurrency companies, New York Attorney General Letitia James warned similar companies on Saturday to “play by the same rules.”
On Monday, James announced that she had reached a $2 billion settlement with cryptocurrency companies in a move that will help investors, including nearly 30,000 New Yorkers, recoup losses over alleged fraud by the businesses.
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The settlement involved cryptocurrency firms Genesis Global Capital, Genesis Asia Pacific PTE and Genesis Global Holdco, as James’ office accused them of hiding more than a billion dollars in losses from investors. Earlier this year, the case expanded to allege that Digital Currency Group and Genesis, along with their top executives, defrauded investors of $2 billion.
As part of the settlement, the companies will be barred from continuing to operate in the state and create a victim fund that will return some money to investors after creditors are paid.
“When investors suffer losses due to fraud and manipulation, they deserve to be made whole,” James said in a statement. “We are seeing the real consequences and adverse losses that can happen due to a lack of oversight and regulation within the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated market.”
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In a Saturday morning post to X, formerly Twitter, James reiterated her efforts on regulating the cryptocurrency industry, writing: “Crypto companies must play by the same rules as everyone else. We will go after those who don’t .”
Newsweek reached out to James’ office and Genesis for comment by email.
According to the attorney general’s office, the recent settlement continues James’ effort to “increase oversight and regulation in this industry and protect New York investors, who have so far secured more than $2.5 billion from predatory cryptocurrency platforms.” “
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This follows last year’s proposed legislation to tighten regulations on the cryptocurrency industry, which James announced in May 2023. The bill would increase transparency, eliminate conflicts of interest and introduce common sense measures to protect investors, in line with regulations which is imposed on other financial services.
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The bill would also require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicting interests.
In addition to warning cryptocurrency companies, James is also urging New Yorkers who have been affected by deceptive behavior in the cryptocurrency industry to report these issues to her office and encourages industry workers who may have witnessed misconduct or fraud took an anonymous whistleblower complaint to her office.
However, the settlement is subject to bankruptcy court approval. Genesis did not accept guilt.
“Under this settlement, Genesis does not admit or deny the allegations of this lawsuit, and the suit will continue against the remaining defendants, as well as Genesis’ former business partner, Gemini Trust Company, LLC,” James’ office said.
In a previous statement to Newsweek, a Genesis spokesperson said the company would not comment beyond the settlement, but was focused on “maximizing value for all creditors.”
“Our goal throughout this process has been to maximize value for all creditors, and we are pleased that the court approved both our Plan and the NYAG Settlement Agreement. We look forward to implementing the Plan and making distributions as soon as possible make.” Derar Islam, interim CEO of Genesis, said in the statement.
In addition, the company also said in its statement that creditors will be compensated “in the form of the original assets they borrowed as much as possible, rather than being limited to the USD value of the cryptocurrency assets as of the petition date and that to convert into cash or other forms of reimbursement that may not reflect the current or future value of the cryptocurrency assets.”
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