Genesis to Pay $8 Million as part of Agreement with New York Regulator
Date: 2024-01-13 Author: Dima Zakharov Categories: IN WORLD
In a groundbreaking development, Genesis Global Trading, a subsidiary of DCG, has agreed to pay a hefty penalty of $8 million to the New York Department of Financial Services (NYDFS). This settlement comes in the wake of an investigation conducted by NYDFS that revealed serious deficiencies in Genesis' anti-money laundering and cybersecurity protocols.
The NYDFS investigation found that Genesis Global Trading had failed to maintain a functional compliance program, demonstrating a disregard for the regulatory requirements set forth by the Department, and potentially exposing the company and its clients to significant threats.
NYDFS conducted two separate examinations of the company, both of which uncovered various violations, including the absence of a designated compliance officer.
As part of the agreement, Genesis will pay the $8 million penalty and cease its operations in New York, relinquishing its BitLicense. Genesis had obtained the BitLicense in 2018.
The troubles for Genesis Global Capital began in November 2022 when the company froze fund withdrawals and halted the issuance of new loans due to increased customer demands following the FTX collapse. The ultimate source of these challenges can be traced back to the collapse of the 3AC hedge fund in July of the same year, which failed to meet its obligations to Genesis Global Capital, amounting to $2.36 billion. The parent company, DCG, stepped in to support the struggling firm.
In January 2023, Genesis Global Holdco and its subsidiaries, Genesis Asia Pacific and Genesis Global Capital, filed for bankruptcy, with reported obligations exceeding $3 billion, including $900 million in claims from Gemini customers.
In August, DCG pledged to reimburse Genesis creditors with 70% to 90% of their funds. However, the creditors deemed the offer unsatisfactory and threatened to block any final bankruptcy deal with such terms. A month later, DCG proposed a new restructuring plan for its subsidiary.
Notably, in January 2024, creditors contested the repayment of debts by the holding company to Genesis Global Trading.
