The New York Attorney General (NYAG) celebrated a significant legal victory as the court approved a settlement with Genesis, aimed at compensating New Yorkers who invested over $1.1 billion in the Genesis through the Gemini Earn program. The settlement also prohibits Genesis from operating in New York State.

In October 2023, the NYAG filed a lawsuit against Genesis, Gemini, and Digital Currency Group (DCG), accusing them of defrauding more than $1 billion from over 230,000 investors, including 29,000 from New York. The lawsuit alleged that Gemini was aware that Genesis’ loans were undersecured and overly concentrated with Alameda Research but failed to disclose this crucial information to investors.

Attorney General Letitia James highlighted the significance of the settlement, stating, "This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice. 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.”

As part of the settlement, Genesis did not admit to any wrongdoing but will be barred from conducting business in New York. Digital Currency Group (DCG), which was initially included in the NYAG's suit, was excluded from the settlement but had previously objected to the settlement process. DCG argued in February that the proposed settlement unlawfully redistributed value to preferred creditors, bypassing U.S. bankruptcy law principles.

Earlier this week, Genesis announced a bankruptcy liquidation plan, approved by the courts, that would return $3 billion worth of customer assets, approximately 77% of the value of customer claims. As part of the settlement, the Victims' Fund will receive up to $2 billion from Genesis' remaining assets after initial bankruptcy distributions to compensate creditors for their remaining losses.

This settlement marks a pivotal moment in the regulation and oversight of the cryptocurrency industry, setting a precedent for future cases involving financial misconduct within the sector.