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Letitia James issues a new warning
Following a recent $2 billion settlement with cryptocurrency companies, New York Attorney General Letitia James on Saturday warned similar companies to “play by the same rules.”
James announced her on Monday has reached a $2 billion settlement with cryptocurrency companies in a move that will help investors, including nearly 30,000 New Yorkers, recover losses resulting from alleged fraud by businesses.
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The settlement involved cryptocurrency firms Genesis Global Capital, Genesis Asia Pacific PTE and Genesis Global Holdco as James’ office accused them of hiding losses of more than $1 billion from investors. Earlier this year, the case expanded to allege that Digital Currency Group and Genesis, along with their top executives, defrauded investors of $2 billion.
As part of the deal, the companies will be barred from continuing to operate in the state and a victims’ fund will be created that will return some of the money to investors after creditors are paid.
“When investors suffer losses due to fraud and manipulation, they deserve to be made whole,” James said in a statement. “We see the real-world consequences and harmful losses that can occur due to a lack of oversight and regulation in the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated market.”
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In a Saturday morning post at X, previously TwitterJames reiterated his efforts to regulate the cryptocurrency industry and wrote: “Cryptocurrency companies must play by the same rules as everyone else. We will prosecute those that don’t.”
Newsweek has reached out to James and Genesis’ office via email for comment.
According to the Attorney General’s Office, the recent settlement continues James’ effort to “increase oversight and regulation in this industry and protect New York investors, who have secured more than $2.5 billion to date from predatory cryptocurrency platforms.”
New York State Attorney General Letitia James is seen March 17 in Staten Island, New York. Following a recent $2 billion deal with cryptocurrency firms, James on Saturday warned similar companies to “play by… New York State Attorney General Letitia James is seen on March 17 in Staten Island, New York. Following a recent $2 billion deal with similar cryptocurrency companies, James warned similar companies on Saturday to “play by the same rules.” More Andrew Lichtenstein/Corbis/Getty Images
This follows last year’s bill to tighten regulations on the cryptocurrency industry, which James announced in May 2023. The bill would increase transparency, eliminate conflicts of interest and impose common-sense measures to protect investors, in line with regulations imposed on other financial services.
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The bill would also require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokers and tokens, to stop conflicts of interest.
In addition to the warning aimed at cryptocurrency companies, James also urges New Yorkers who have been affected by deceptive behavior in the cryptocurrency industry to report such issues to his office and encourages industry workers who may have witnessed misconduct or fraud to file an anonymous whistleblower complaint to his office.
However, the deal is subject to bankruptcy court approval. Genesis did not accept the blame.
“Under this agreement, Genesis neither admits nor denies the allegations in this lawsuit, and the lawsuit will continue against the remaining defendants, as well as Genesis’ former business partner, Gemini Trust Company, LLC,” the James’s office.
In an earlier statement to Newsweek, a spokesperson for Genesis said the company would not comment further on the deal but was focused on “maximizing value for all creditors.”
“Our goal throughout this process has been to maximize value for all creditors and we are pleased that the court approved both our Plan and the NYAG settlement agreement. We look forward to implementing the Plan and make distributions as quickly as possible,” Derar Islam, interim CEO of Genesis, said in the statement.
Furthermore, the company also said in its statement that creditors will be compensated “as much as possible in the form of the original assets they lent, rather than being limited to the USD value of the cryptocurrency assets as of the date of the request and converting them into cash or other forms redemption rates that may not reflect the current or future value of the cryptocurrency assets.”
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.