Genesis, the bankrupt crypto lender owned by the Digital Currency Group (DCG), has agreed to a $2 billion settlement to partially repay customers affected by its 2023 bankruptcy filing. The New York Attorney General’s office announced the settlement on Monday, marking a significant step toward compensating users who suffered losses.
Settlement Details
The settlement, approved late Friday, aims to reimburse users for approximately 77% of the crypto funds they had provided to Genesis in exchange for yield, according to the Wall Street Journal. New York Attorney General Letitia James emphasized the importance of this settlement in ensuring justice for the victims of Genesis’s financial collapse.
“When investors suffer losses because of fraud and manipulation, they deserve to be made whole,” James stated. “This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice.”
Background of Genesis’s Bankruptcy
Genesis filed for bankruptcy in January 2023 following a series of related crypto collapses, including the sudden shutdown of the prominent crypto exchange FTX and the crypto hedge fund Three Arrows Capital. The firm and its parent company, DCG, have since been involved in a public dispute with the crypto exchange Gemini over approximately $900 million owed to Gemini customers through its Gemini Earn lending platform.
Asset Sales and Additional Settlements
As the settlement process progressed, Genesis received approval in February to sell about $1.6 billion worth of shares in the Grayscale Bitcoin Trust (GBTC) and other Grayscale crypto products. Additionally, the firm agreed to a $21 million settlement with the U.S. Securities and Exchange Commission (SEC) to resolve charges, although the agency will be paid after the creditors are compensated.
Gemini’s Role and Settlement
In February, Gemini agreed to fully repay its Earn program customers a total of $1.1 billion, while also paying the New York Attorney General a $37 million fine. This agreement highlights the ongoing efforts to provide restitution to those affected by the crypto market’s turbulence.
The $2 billion settlement with Genesis represents a significant victory for investors seeking recompense for their losses. With this historic agreement, the New York Attorney General’s office has taken a crucial step toward ensuring justice for those impacted by the crypto lender’s bankruptcy.
