Genesis Pays $8 Million and Forfeits BitLicense to Settle New York Charges – Decrypt

Genesis Global Trading, a subsidiary of the influential cryptocurrency conglomerate Digital Currency Group (DCG), has reached a settlement with the New York Department of Financial Services (DFS) that includes forfeiting its BitLicense, ceasing operations, and paying an $8 million fine, according to a report in Fortune.

The New York regulator said its probe into the company unearthed significant shortcomings in the company’s anti-money laundering and cybersecurity protocols.

Genesis did not immediately respond to a request for comment from Decrypt.

Under the terms of the settlement, Genesis Global Trading will relinquish its BitLicense—a crypto business registration that’s unique to New York—halt its New York-based operations, and pay an $8 million penalty.

Superintendent Adrienne Harris of DFS highlighted the firm’s failure to uphold a robust compliance framework, underscoring the potential risks to both the company and its clients.

“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,” Harris told Fortune.

Gensis is one of the key portfolio companies that helped make DCG has a a key player in the American crypto industry. However, the company became entangled in the tumultuous crypto market collapse of 2022, leading to heightened regulatory scrutiny and eventual bankruptcy in early 2023.

While Genesis Global Trading was not directly implicated in the bankruptcy or the subsequent legal challenges faced by DCG, it nonetheless felt the repercussions of its parent company’s difficulties. For example, in September the firm announced the closure of its over-the-counter trading platform in the U.S.

The DFS’s action against Genesis Global Trading comes at a pivotal moment for crypto regulation in New York. The state has been at the forefront of crypto oversight in the U.S., with DFS being the sole regulator offering a comprehensive framework for the industry. This move also follows DFS’s approval of the Gemini Earn program for the Gemini exchange, another BitLicense holder, which later faced legal challenges.

The settlement, while reflecting Genesis’s cooperation and remedial efforts, signifies a critical moment in the ongoing debate over cryptocurrency regulation and oversight. It underscores the necessity for robust compliance mechanisms in the rapidly evolving and inherently risky domain of digital currencies. As regulators and industry players continue to navigate this complex landscape, the Genesis case serves as a cautionary tale and a potential blueprint for future regulatory actions.

Editor’s note: This article was written with the assistance of AI. Edited and fact-checked by Stacy Elliott.

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• Source: https://decrypt.co/212656/genesis-pays-8-million-and-forfeits-bitlicense-to-settle-new-york-charges