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Letitia James issues new warning

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Letitia James issues new warning

Following a recent $2 billion settlement with cryptocurrency companies, New York Attorney General Letitia James warned similar companies on Saturday to “play by the same rules.”

James announced on Monday she reached a $2 billion settlement with cryptocurrency companies in a move that will assist investors, including nearly 30,000 New Yorkers, to recoup losses over alleged fraud by the businesses.

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The settlement involved cryptocurrency businesses Genesis Global Capital, Genesis Asia Pacific PTE and Genesis Global Holdco as James’ office accused them of hiding more than a billion dollars in losses from investors. Earlier this year, the case widened to allege that Digital Currency Group and Genesis, along with their top executives, defrauded investors of $2 billion.

As part of the settlement, the companies will be barred from continuing to operate in the state and create a victims’ fund that will provide some money back to investors after creditors are paid.

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“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” James said in a statement. “We see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated marketplace.”

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In a Saturday morning post to X, formerly Twitter, James reiterated her efforts around regulating the cryptocurrency industry and wrote, “Crypto companies must play by the same rules as everyone else. We will go after those that don’t.”

Newsweek has reached out to James’ office and Genesis via email for comment.

According to the attorney general’s office, the recent settlement continues James’ effort to “increase oversight and regulation in this industry and protect New York investors, which has secured more than $2.5 billion from predatory cryptocurrency platforms to date.”

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New York State Attorney General Letitia James is seen on March 17 in Staten Island, New York. Following a recent $2 billion settlement with cryptocurrency companies, James warned similar companies on Saturday to “play by…


Andrew Lichtenstein/Corbis/Getty Images

This follows last year’s proposed legislation to tighten regulations on the cryptocurrency industry, which James announced in May 2023. The bill would increase transparency, eliminate conflicts of interest, and impose commonsense measures to protect investors, consistent with regulations imposed on other financial services.

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The bill would also require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest.

In addition to the warning to cryptocurrency companies, James is also urging New Yorkers who have been affected by deceptive conduct in the cryptocurrency industry to report these issues to her office and encourages workers in the industry who may have witnessed misconduct or fraud to file an anonymous whistleblower complaint with her office.

However, the settlement is contingent upon approval from the bankruptcy court. Genesis has not accepted guilt.

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“Under this settlement, Genesis neither admits nor denies the allegations of this lawsuit, and the suit will continue against the remaining defendants, as well as Genesis’ former business partner, Gemini Trust Company, LLC,” James’ office said.

In a previous statement to Newsweek, a Genesis spokesperson said the company would not comment beyond the settlement, but has been focused on “maximizing value for all creditors.”

“Our goal throughout this process has been to maximize value for all creditors, and we are gratified that the court approved both our Plan and the NYAG settlement agreement. We look forward to putting the Plan into effect and making distributions as expeditiously as possible,” Derar Islim, interim CEO of Genesis, said in the statement.

In addition, the company also said in its statement that creditors will compensated “in the form of the original assets they loaned as much as possible, rather than being limited to the USD value of the cryptocurrency assets as of the petition date and converting these into cash or other forms of repayment that might not reflect the current or future value of the cryptocurrency assets.”