Genesis Global Trading, a prominent player in the cryptocurrency lending sector, has reached a settlement with the New York Department of Financial Services (NYDFS).
In a move to address concerns raised during a recent investigation, the company has agreed to pay a substantial fine of $8 million, relinquish the BitLicense it had obtained back in 2018, and cease all operations within the state of New York.
The investigation conducted by New York authorities revealed significant shortcomings in Genesis Global Trading’s anti-money laundering and cybersecurity protocols, which had left the firm vulnerable to potential illicit activities.
Superintendent Adrienne Harris of the NYDFS emphasized the importance of the department’s robust regulations in protecting consumers and financial institutions, stating, “DFS’s virtual currency and cybersecurity regulations are often cited as the gold standard, providing clear and stringent requirements to protect consumers and safeguard institutions from bad actors.”
The investigation highlighted critical deficiencies in Genesis Global Trading’s compliance program, including issues related to the Bank Secrecy Act, anti-money laundering compliance, transaction monitoring, Suspicious Activity Report filings, Office of Foreign Assets Control screening, and cybersecurity measures.
As a consequence of these findings, Genesis Global Trading is now required to surrender its BitLicense, which it had obtained in 2018, effectively ending its operation under the NYDFS jurisdiction.
Last year, Genesis Global Trading had already taken steps to wind down its US-focused spot crypto trading activities, notifying its clients via email and implementing the closure on September 30, 2023. This decision was attributed to voluntary strategic reasons.
It’s worth noting that during this process, GGC International Limited, an affiliated entity, continued to operate some of Genesis Global Trading’s services, thus avoiding the financial troubles faced by Genesis Global itself.
Nevertheless, Genesis Global Trading still faces ongoing legal challenges, including a lawsuit filed by Gemini, a cryptocurrency exchange, alleging fraudulent activities related to a digital asset lending platform operated by both companies.
This adds to a broader legal landscape where both Genesis Global and Gemini were subject to legal action by the SEC in the previous year for allegedly offering unregistered securities through their crypto lending products.
Additionally, a class-action lawsuit initiated by investors against Gemini, regarding the Gemini Earn Program, further complicates the legal situations surrounding these entities.