Genesis to Pay $8 Million in Settlement with New York Regulator

Genesis Global Trading, a subsidiary of DCG, has reached an agreement with the New York Department of Financial Services (NYDFS). The decision follows an investigation that “identified significant failures in anti-money laundering and cybersecurity programs.”

NEW: Superintendent Adrienne A. Harris Announces $8 Million Penalty Against Genesis Global Trading, Inc. After DFS Investigation Finds Significant Failings in Anti-Money Laundering and Cybersecurity Programs

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— NYDFS (@NYDFS) January 12, 2024

“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated disregard for the Department’s regulatory requirements and exposed the company and its customers to potential risks,” the regulator’s statement said.

NYDFS conducted two examinations of the company and found violations, including the absence of a dedicated compliance officer.

The agreement includes an $8 million fine, cessation of operations in New York, and the surrender of its BitLicense, which Genesis obtained in 2018.

On November 16, 2022, Genesis Global Capital froze withdrawals and the issuance of new loans, citing “increased requests” from clients following the collapse of FTX.

The difficulties originated from the collapse of the hedge fund 3AC in July of the same year. The latter defaulted on obligations to Genesis Global Capital amounting to $2.36 billion. The parent company, DCG, provided support to the firm.

In January 2023, Genesis Global Holdco and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. According to media reports, their liabilities exceed $3 billion, including $900 million in claims from Gemini clients.

In August, DCG promised to reimburse Genesis creditors between 70% and 90% of 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 the subsidiary firm.

In January 2024, creditors challenged the holding’s repayment of debt to Genesis.