New York AG Letitia James Reinforces Crypto Crackdown with $2 Billion Genesis Settlement

New York Attorney General Letitia James is intensifying her scrutiny of the cryptocurrency sector, emphasizing the need for industry compliance with regulatory standards. On May 25, James asserted on her official X account, “We will go after those that don’t.”

A Legacy of Enforcement

Since taking office in 2018, James has built a formidable record of enforcement actions against crypto firms. In 2019, she initiated a prolonged legal battle with Tether, the issuer of the USDT stablecoin, and the Bitfinex exchange, culminating in an $18.5 million fine. Her aggressive stance continued with actions against companies such as KuCoin and Coinseed, the former agreeing to a $22 million settlement in December 2023. These efforts have cemented James’ reputation as a vigilant regulator, ensuring that cryptocurrency entities operate within legal boundaries or face severe penalties.

James’ recent warning follows her office’s substantial $2 billion settlement with Genesis Global, a beleaguered crypto lender that filed for Chapter 11 bankruptcy in January 2023. The settlement mandates that Genesis return approximately $3 billion in cash and cryptocurrency to its customers, marking the largest agreement of its kind between New York State and a cryptocurrency firm.

Regulatory Gaps and Investor Protection

In the aftermath of the settlement, James voiced her concerns over the regulatory deficiencies within the crypto industry. “Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry,” she stated. A notable component of the settlement is the establishment of a victims’ fund designed to aid defrauded investors, including 29,000 New Yorkers who collectively invested over $1.1 billion in Genesis via the Gemini Earn program.

James’ pursuit of Genesis in October 2023 alleged the concealment of significant losses from investors. However, under the settlement terms, Genesis has neither admitted nor denied these allegations. Additionally, the settlement requires Genesis, Gemini, and the Digital Currency Group to cease operations in New York.

High-Profile Cases

Among James’ high-profile legal battles is her civil fraud lawsuit against former President Donald Trump, his adult sons, and The Trump Organization, resolved in March. The court ordered Trump to pay $454 million, including $355 million in penalties and nearly $100 million in interest.

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