Business ProfileforGenesis Global Capital LLC

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

On March 19, 2024, the Securities and Exchange Commission (SEC) announced that Genesis Global Capital, LLC agreed to a final judgment ordering it to pay a $21 million civil penalty and imposing a permanent injunction to settle charges that it engaged in the unregistered offer and sale of securities through a crypto asset lending program known as the Gemini Earn program. Under the terms of the settlement, the SEC will not receive any portion of the penalty until after payment of all other allowed claims by the bankruptcy court, including claims by retail investors in the Gemini Earn program.

The SEC charged Genesis and Gemini Trust Company, LLC (“Gemini”) on January 12, 2023. According to the SEC’s complaint, the Gemini Earn program was a purported investment opportunity where Gemini customers, including retail investors in the United States, loaned their crypto assets to Genesis in exchange for Genesis’ promise to pay interest earned from Genesis’ use of the loaned crypto assets. The complaint alleges that, in November 2022, Genesis announced that it would not allow the Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market. At the time, Genesis held approximately $900 million in crypto assets from 340,000 Gemini Earn investors.

Genesis and two affiliates filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York on January 19, 2023. Investors have been unable to access or withdraw the crypto assets they invested with Genesis via Gemini Earn. The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charged Genesis and Gemini with violating Sections 5(a) and 5(c) of the Securities Act of 1933. In addition to the civil penalty referenced above, Genesis, without admitting or denying the allegations in the SEC’s complaint, consented to the entry of a final judgment permanently enjoining Genesis from violating Section 5 of the Securities Act.

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

On 5/20/2024, New York Attorney General Letitia James announced her office had secured a settlement worth $2 billion with bankrupt cryptocurrency firms Genesis Global Capital, LLC, Genesis Asia Pacific PTE, LTD., and Genesis Global Holdco, LLC (Genesis) that will help maximize recoveries for investors who were defrauded. The settlement, which required review and approval by a bankruptcy court due to Genesis’ previous bankruptcy declaration, will establish a victims fund to help defrauded investors, including at least 29,000 New Yorkers, who contributed more than $1.1 billion to Genesis through the Gemini Earn investment program. Additionally, the settlement bans Genesis from operating in New York. The settlement, the largest against a cryptocurrency company in state history, continues Attorney General James’ work to increase oversight and regulation in this industry and protect New York investors, which has secured more than $2.5 billion from predatory cryptocurrency platforms to date.

The settlement, which required bankruptcy court approval, will create a “Victims’ Fund” for Genesis’ creditors and resolves Attorney General James’ claims against Genesis for defrauding hundreds of thousands of investors nationwide, including at least 29,000 New Yorkers. In October 2023, Attorney General James filed a lawsuit alleging that Genesis, along with other defendants, concealed more than $1.1 billion in losses from investors that provided digital assets through an investment program called “Gemini Earn.” That lawsuit was expanded in February against Digital Currency Group, Inc. (DCG), Genesis, DCG’s CEO, Barry Silbert, and Genesis’ former CEO, Soichiro Moro, for defrauding additional individuals and institutions of an additional $2 billion. Under this settlement, Genesis neither admits nor denies the allegations of this lawsuit, and the suit will continue against the remaining defendants, as well as Genesis’ former business partner, Gemini Trust Company, LLC.

The Victims’ Fund established through this settlement between the Office of the Attorney General (OAG) and Genesis will receive distributions from the assets remaining in Genesis’ estate after initial bankruptcy distributions to creditors. If those creditors are not made whole based on today’s digital asset values, the Victims’ Fund will receive up to $2 billion from Genesis’ remaining assets. The Victims’ Fund will then make distributions to compensate Genesis’ creditors for the full and fair amounts of their actual losses until the Victims’ Fund is depleted.