Genesis Global Settles with NYDFS, Pays $8M: Exits New York
The New York State Department of Financial Services (NYDFS) has reached a settlement agreement with crypto trading firm Genesis Global Trading over significant compliance violations. Genesis will pay $8 million, forfeit its state trading license, and shut down operations in New York, as the regulator shared exclusively with Fortune.
- NYDFS said an investigation uncovered major deficiencies in Genesis’s anti-money laundering controls and cybersecurity safeguards.
- As part of the settlement, Genesis surrendered its New York trading license and ability to operate in the state.
- Action comes amid ongoing lawsuits and scrutiny tied to Genesis parent company Digital Currency Group’s role in the 2022 crypto collapse.
The subsidiary of Digital Currency Group (DCG) was the only company in the conglomerate to hold a BitLicense to conduct virtual currency activities from NYDFS.
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Regulators cited Genesis Global’s inadequate compliance
Regulators cited an “inadequate” compliance program that failed expectations and potentially exposed customers. This included issues handling ransomware attacks and suspicious transactions, Superintendent Adrienne Harris said in a statement provided to Fortune.
Parent company DCG remains embroiled in legal action over allegedly unregistered securities offerings made to customers last year amid massive industry turmoil. Genesis itself faces separate lawsuits from the SEC and the New York Attorney General related to its crypto lending activities.
The firm shut down its US trading desk in September as a result of parent struggles. The relatively small settlement amount accounts for Genesis’s cooperation with investigators and efforts to upgrade procedures.
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DCG continues to undergo a contentious restructuring process with creditors in the wake of failed bets on crypto hedge fund Three Arrows Capital and trading giant Alameda Research. Genesis engaged in extensive dealings with both collapsed companies ahead of its bankruptcy filing earlier this year.
With Genesis withdrawing entirely from the New York market, it faces a complicated path toward rebuilding its regulatory standing across jurisdictions.
