Prominent cryptocurrency company Genesis Global Trading has agreed to a settlement with the New York Department of Financial Services (NYDFS) that will see the firm cease operations in the state. Genesis will pay an $8 million fine and voluntarily surrender its coveted BitLicense as part of the deal.
The settlement comes after an NYDFS investigation uncovered significant deficiencies in Genesis’ anti-money laundering and cybersecurity protocols. Superintendent Adrienne Harris stressed the serious repercussions of disregarding regulatory mandates, stating;
“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirements.”
The deal pertains specifically to Genesis Global Trading, separate from sister company Genesis Global Capital which filed for bankruptcy last year. Both firms are owned by Digital Currency Group (DCG). Separately, New York’s Attorney General has an ongoing lawsuit against Genesis Global Capital, Gemini, and DCG over alleged investor fraud within the Gemini Earn program.
Genesis Global Capital’s bankruptcy proceedings continue, with a recent filing claiming DCG has not yet satisfied its loan obligations to Genesis. DCG stated it “paid off more than $1 billion of debt” to creditors including Genesis.
However, Genesis lenders contend DCG only provided $189 million in cash, covering the rest with illiquid assets like shares of Grayscale Ethereum Classic Trust and Grayscale Ethereum Trust. Lenders say this does not satisfy DCG’s debts which require USD and BTC only.
The resolution of DCG’s outstanding BTC commitments to Genesis rests on whether these trust shares can be liquidated for BTC. As Genesis winds down its New York operations, the fate of its bankruptcy and DCG’s role remain unfinished business.
