Cryptocurrency fraud over one billion US dollars: Genesis pays two billion
With an investment program for cryptocurrency, Genesis is said to have relieved victims of one billion US dollars. Much more money is to be paid in compensation.
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The New York Attorney General has reached an agreement with the bankrupt cryptocurrency service Genesis to pay up to 2 billion US dollars to injured customers. This was announced by Letitia James' office on Monday, adding that at least 29,000 people in New York alone could benefit from this.
James has accused Genesis of being part of a fraud scheme that defrauded people of a total of one billion US dollars. The company, which has since gone bankrupt, is now to use the two billion US dollars to ensure that the injured parties each receive as much money as their crypto money would be worth today.
Risks concealed
The settlement was preceded by a lawsuit filed by the Attorney General against Genesis, the cryptocurrency service Gemini and Genesis' parent company DCG. James has accused the companies of defrauding hundreds of thousands of people with an investment program called Gemini Earn. Under the scheme, Genesis was able to lend cryptocurrency to be invested for profit. It was publicly claimed that the risk was low, but internally a different conclusion was reached. The money was almost exclusively invested in Alameda Research, a hedge fund that later collapsed with the crypto exchange FTX. When those involved downgraded the value of Genesis internally to junk status, customers were not informed.
As James' office now explains, once the settlement has been approved by the competent bankruptcy court, a fund will be set up for Genesis' victims. Money from the bankrupt company or proceeds from the sale of assets will flow into this pot to compensate the injured parties. They should each receive as much as the crypto assets they transferred to Genesis would be worth today, i.e. certainly more than the 1.1 billion US dollars James has named as the amount of damages due to the recent crypto rally. The maximum amount to be paid in was limited to two billion US dollars. James speaks of a "historic settlement". Genesis is also prohibited from operating in New York.
(mho)