Bankrupt crypto lender Genesis Global Holdco LLC has resolved the fraud charges levelled against it by the New York Attorney General, Letitia James, in connection with its now-defunct Gemini Earn programme.
A settlement has been reached, ensuring that assets earmarked for the state regulator will be redirected to former Earn customers and other creditors of Genesis.
The original lawsuit filed by James last October implicated Genesis, its parent company Digital Currency Group, and Gemini, alleging that they fraudulently handled $1.1 billion of customer funds.
Genesis and Gemini jointly operated the Earn programme, but their collaboration soured, resulting in ongoing legal disputes.
The Earn programme involved customers receiving interest on their digital assets, which were loaned to other customers.
James’ complaint contended that the programme failed to adequately disclose the risks associated with lending.
It also accused the parties of concealing a $1 billion loss following the collapse of crypto hedge fund Three Arrows Capital. However, Genesis, Digital Currency Group, and Gemini have denied any wrongdoing.
The recent settlement exclusively resolves the charges against Genesis.
Despite this, the insolvent company settled without acknowledging liability and committed to ceasing its operations in New York State.
Approval of the settlement between Genesis and the state’s chief law enforcement officer awaits a bankruptcy judge’s endorsement.
Previously, Genesis Global Trading, the crypto lending company’s sister unit, reached a settlement with the New York State Department of Financial Services, agreeing to pay $8 million in penalties for compliance failures.
Additionally, it surrendered its BitLicense, necessary for offering crypto services in New York.
Genesis’ woes extended beyond New York state authorities.
Axios reported that the bankrupt firm settled a civil lawsuit with the Securities and Exchange Commission, which accused Genesis and Gemini of offering unregistered securities through the Earn programme.