Genesis Global Trading Faces $8 Million Fine


Genesis Global Trading has agreed to a settlement
with the New York Department of Financial Services (NYDFS). The company, known
for its crypto lending services, will pay a fine of $8 million, relinquish the
BitLicense obtained in 2018, and cease all operations in New York.

This move followed an investigation by authorities in New York, exposing flaws in Genesis’ anti-money laundering and cybersecurity
protocols, rendering the firm susceptible to illicit activities.

The NYDFS’ Superintendent Adrienne Harris mentioned: “DFS’s virtual currency
and cybersecurity regulations are often cited as the gold standard, providing
clear and stringent requirements to protect consumers and safeguard institutions
from bad actors.”

“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.”

The DFS’ investigation pointed to flaws in crucial
areas such as the Bank Secrecy Act, anti-money laundering compliance,
transaction monitoring, Suspicious Activity Report filings, Office of Foreign
Assets Control screening, and cybersecurity.

Licensed in 2018, Genesis Global Trading operated
under the purview of the NYDFS. However, the latest settlement necessitates that the company surrender its BitLicense.

Last year, Genesis Global Trading announced the closure of its US-focused spot crypto trading operations. This decision, conveyed to clients through email, took effect on September 30, 2023. It followed Genesis Global Trading’s legal disputes with FTX. Clients were advised to settle all trades by
September 21, 2023, with any remaining accounts set to be closed. The official
statement attributed this move to voluntary reasons related to the overall
business strategy.

Genesis Global Trading’s Legal Battles

Amid the closure of operations, GGC International Limited, an
entity affiliated with Genesis, continued operating Genesis Global Trading’s spot and derivatives trading services. Notably, Genesis Global Trading managed to escape
Genesis Global’s financial troubles.

However, the legal hurdles facing Genesis Global Trading do not end there, as the company and its Founder, Barry Silbert, face a lawsuit from Gemini. The cryptocurrency exchange alleges fraudulent activities related to a digital asset lending platform operated by both companies.

In the broader crypto landscape, Genesis Global and
Gemini faced legal action from the SEC in
January last year for allegedly offering unregistered securities through their crypto
lending product. Additionally, a class-action lawsuit initiated by investors
against Gemini concerning the Gemini Earn Program adds complexity to the
legal challenges faced by these entities.

Genesis Global Trading has agreed to a settlement
with the New York Department of Financial Services (NYDFS). The company, known
for its crypto lending services, will pay a fine of $8 million, relinquish the
BitLicense obtained in 2018, and cease all operations in New York.

This move followed an investigation by authorities in New York, exposing flaws in Genesis’ anti-money laundering and cybersecurity
protocols, rendering the firm susceptible to illicit activities.

The NYDFS’ Superintendent Adrienne Harris mentioned: “DFS’s virtual currency
and cybersecurity regulations are often cited as the gold standard, providing
clear and stringent requirements to protect consumers and safeguard institutions
from bad actors.”

“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.”

The DFS’ investigation pointed to flaws in crucial
areas such as the Bank Secrecy Act, anti-money laundering compliance,
transaction monitoring, Suspicious Activity Report filings, Office of Foreign
Assets Control screening, and cybersecurity.

Licensed in 2018, Genesis Global Trading operated
under the purview of the NYDFS. However, the latest settlement necessitates that the company surrender its BitLicense.

Last year, Genesis Global Trading announced the closure of its US-focused spot crypto trading operations. This decision, conveyed to clients through email, took effect on September 30, 2023. It followed Genesis Global Trading’s legal disputes with FTX. Clients were advised to settle all trades by
September 21, 2023, with any remaining accounts set to be closed. The official
statement attributed this move to voluntary reasons related to the overall
business strategy.

Genesis Global Trading’s Legal Battles

Amid the closure of operations, GGC International Limited, an
entity affiliated with Genesis, continued operating Genesis Global Trading’s spot and derivatives trading services. Notably, Genesis Global Trading managed to escape
Genesis Global’s financial troubles.

However, the legal hurdles facing Genesis Global Trading do not end there, as the company and its Founder, Barry Silbert, face a lawsuit from Gemini. The cryptocurrency exchange alleges fraudulent activities related to a digital asset lending platform operated by both companies.

In the broader crypto landscape, Genesis Global and
Gemini faced legal action from the SEC in
January last year for allegedly offering unregistered securities through their crypto
lending product. Additionally, a class-action lawsuit initiated by investors
against Gemini concerning the Gemini Earn Program adds complexity to the
legal challenges faced by these entities.

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