Genesis agrees to settle case brought by New York attorney general
The bankrupt crypto lender’s settlement proposal comes after it agreed to pay a possible $21 million as part of an agreement with the SEC last week
New York Attorney General Letitia James | lev radin/Shutterstock modified by Blockworks
Genesis has settled a suit that New York’s attorney general launched against the crypto lender last year, marking the crypto firm’s second such agreement in the past week.
New York Attorney General Letitia James in October filed a lawsuit against Genesis and Gemini, alleging the firms had conspired on two “fraudulent schemes” related to their Gemini Earn product.
Investors lost more than $1 billion in November 2022 when withdrawals from the platform were suspended, according to the complaint.
Genesis’ proposed settlement agreement, filed Thursday, is a step toward “eliminating the risks, expenses and uncertainty associated with protracted litigation against NYAG,” the company said in a court motion.
The motion must still be approved by the US bankruptcy court, the document notes.
Genesis’ lending unit filed for Chapter 11 bankruptcy protection in January 2023.
“The Special Committee has concluded that it would not be in the best interests of the debtors’ estates to continue to incur litigation costs and expenses to defend against the NY Action related to business activities that are not ongoing,” the motion states.
As part of the proposed agreement, Genesis would cease all current and future business activities in New York.
Gemini said in an October X post that it disagreed with the New York attorney general, including the firm in the complaint. Genesis lied to Gemini about its financial position, the company claimed, adding that Gemini, Earn users, and other creditors were “the victims of a massive fraud.”
A representative for Genesis could not immediately be reached.
Genesis parent company Digital Currency Group was also named in the complaint for allegedly coordinating with the companies to perpetuate the scheme. The company noted it was “blindsided” by the filing in a statement at the time and denied wrongdoing.
The Thursday motion by Genesis to settle the suit comes about a week after the company agreed to settle a similar case brought by the SEC.
The US regulator filed its suit against Genesis in January 2023, accusing the company of pooling assets from Gemini Earn with funds from other customers.
Genesis could pay $21 million as part of the agreement, the SEC said last week, though the amount is subject to creditor repayment.
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