Bankrupt crypto firm Genesis Global Holdco and the New York Attorney General's Office have reached a settlement after the firm was sued last year for defrauding New Yorkers of more than $1 billion.
Genesis Global Holdco filed a motion in the U.S. Bankruptcy Court in the Southern District of New York on Thursday asking the judge to approve the settlement.
"After months of hard-fought negotiation, the Debtors and NYAG have reached a resolution of the NY Action," Genesis said in a court filing.
New York Attorney General Letitia James sued Gemini, Genesis and its parent company Digital Currency Group in October over a Gemini crypto lending program. Genesis and Gemini began offering that program to retail investors in 2021 and said it could enable them to earn up to 7.4 percent APY.
The settlement agreement on Thursday will allow the debtors to avoid "extensive litigation costs" and allows them to focus on making the most of recoveries for creditors, they said. The NYAG has also "has agreed to receive payment under the Settlement Agreement if and only if all general unsecured creditors of the Debtors are made whole," according to the court filing.
Last week, Genesis Global Holdco settled a lawsuit brought by the Securities and Exchange Commission and agreed to pay $21 million.
The SEC said the Gemini Earn program was an unregistered securities offering where they were able to raise "billions of dollars'" worth of crypto from thousands of investors. The SEC said Genesis lacked enough liquid assets to meet withdrawal costs a year into the program leaving investors dry, among other allegations. New York's James said Genesis hid $1.1 billion in losses.
Genesis Global Holdco filed for bankruptcy protection in January 2022 after taking a financial hit following the collapses of crypto hedge fund Three Arrows Capital and crypto exchange FTX in 2022.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.