Genesis Global Ordered To Repay $3 Billion To Defrauded Investors By US Bankruptcy Court

The US Bankruptcy Court for the Southern District of New York has approved a $3 billion settlement between crypto lender Genesis Global and the New York Attorney General on 17 May 2024. According to a Reuters report, the court has also confirmed an Amended Plan of Reorganization for the defunct company Genesis and its subsidiaries.

The settlement aims to compensate defrauded investors who invested over $1 billion through the company’s Gemini Earn program. The settlement also prohibits Genesis from operating in New York.

Justice For Nearly 30,000 Defrauded Investors

Commenting on the settlement, New York Attorney General (NYAG) Letitia James said, “This settlement provides justice for the victims who invested in Genesis and ensures they receive compensation for their losses.”

The lawsuit against Genesis Global was filed by the NYAG filed back in October 2023, accusing Genesis of hiding over $1 billion in losses. The lawsuit expanded in February 2024 to include claims against Digital Currency Group (DCG), its CEO Barry Silbert, and Genesis’s ex-CEO Soichiro Moro, alleging an additional $2 billion in investor fraud.

🚨BREAKING: N.Y. AG LETITIA JAMES ANNOUNCES $2,000,000,000 SETTLEMENT WITH FAILED #CRYPTO LENDER GENESIS, LARGEST OF ITS KIND AGAINST A #CRYPTO COMPANY IN NEW YORK'S HISTORY pic.twitter.com/jJiFn9FEBZ

— Blockchain Daily (@blckchaindaily) May 20, 2024

The NYAG’s administration continues to pursue litigation against DCG and its executives. An official objection was filed by DCG over the settlement between Genesis and the NYAG. There were concerns that it did not conform to the Bankruptcy Code and its implications for the rights of DCG as a creditor and equity holder.

The settlement with Genesis is part of Letitia James’ ongoing efforts to bring regulation to the crypto industry. Early successes have seen the Attorney General securing over $2.5 billion from exploitative crypto platforms to date.

The court also confirmed the company ‘s Amended Plan of Reorganization. This will see the creation of a ‘Victims Fund’ to fairly distribute Genesis’ remaining assets toward affected parties.

According to the Court, Creditors should receive distributions in kind to maintain the value of their original crypto holdings rather than converting to cash.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.