March 27, 2024
Genesis Global Trading settles with NYDFS, will forfeit BitLicense and pay $8M
Policy & Regulation

Genesis Global Trading settles with NYDFS, will forfeit BitLicense and pay $8M

In a significant development for the cryptocurrency industry, Genesis Global Trading has settled with the New York Department of Financial Services (NYDFS), agreeing to pay an $8-million penalty and forfeiting its ability to conduct operations in the state. The settlement comes after a thorough investigation by New York authorities, revealing what they termed as “significant failings” in Genesis’ Anti-Money Laundering (AML) and cybersecurity programs.

As per the Jan. 12 announcement, Genesis has chosen to cease operations in New York and voluntarily surrender its BitLicense, a regulatory license that the firm has held since 2018. The settlement underscores the seriousness of the lapses identified during the investigation, with the NYDFS pointing to Genesis Global Trading’s failure to maintain a functional compliance program as a key concern.

“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirements and exposed the company and its customers to potential threats,” stated NYDFS Superintendent Adrienne Harris.

It is important to note that the settlement specifically pertains to Genesis Global Trading and not its affiliate, Genesis Global Capital. The latter remains distinct and was not included in the Chapter 11 bankruptcy protection filing made by its parent company in January 2023. Additionally, Genesis Global Capital has faced separate legal action, with New York’s attorney general filing a lawsuit in October against the entity, along with Gemini and Digital Currency Group. The lawsuit alleges fraudulent activities related to the Gemini Earn program.

The settlement with Genesis Global Trading follows concerns raised by New York’s Office of the Comptroller regarding the management of BitLicense applicants by the NYDFS. Since 2015, cryptocurrency firms operating in the state have been required to apply for a BitLicense through the regulator.

This development underscores the regulatory scrutiny faced by cryptocurrency entities and the importance of robust compliance programs. As the industry navigates evolving regulatory landscapes, such settlements serve as reminders of the need for stringent measures to prevent illicit activities and safeguard the interests of both companies and their customers.

Image: Wikimedia Commons

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