Genesis Global, a bankrupt cryptocurrency lender, has entered into an agreement with New York Attorney General Letitia James in relation to one of the lawsuits on fraud allegedly targeted at customers through the Earn Program.
With the aid of Earn, clients deposited their wallets’ digital assets and earned interest. However, the Securities and Exchange Commission considers yield-generation programs unregistered securities offerings.
The settlement with New York Attorney General Letitia James is structured so that assets that could have otherwise gone to state authorities will instead be returned to former Earn customers and other Genesis creditors. This follows a separate $21 million settlement by Genesis with the SEC over Earn.
In October 2022, Attorney General Letitia James sued Genesis and its parent company, Digital Currency Group, Gemini, for alleged fraud totaling $1.1 billion. The current settlement addresses allegations against Genesis specifically.
While denying wrongdoing, Genesis agreed to settle without admitting liability. The company will also cease New York operations and undergo liquidation.
The settlement offers creditors the recovery of assets in crypto or cash, regardless of how Genesis settles debts. Genesis proposed returning crypto assets to affected Earn clients, though the judge may still mandate cash repayment.
A key aspect is an agreement among major Genesis creditors to value digital assets closer to current market prices, unlike previous crypto bankruptcies. This accounts for a significant bull market since the January 2023 Chapter 11 filing.
However, the parent company, Digital Currency Group, opposes the plan, arguing it could unfairly benefit certain creditors. Genesis will present its liquidation plan on February 14th, seeking approval of both the settlement and plan.