Crypto firm Genesis settles with NYDFS, pays $8M fine and forfeits BitLicense

BLOCKCHAIN

The New York Department of Financial Services announced today a settlement with cryptocurrency spot-trading firm Genesis Global Trading Inc. requiring it to pay an $8 million fine and give up its license to operate with virtual currencies in New York.

According to a statement from the NYDFS, following an investigation of the firm, the department discovered that the company had failed to follow the standards of the Bank Secrecy Act and Anti-Money Laundering compliance, transaction monitoring and cybersecurity regulations.

“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,” said NYDFS Superintendent Adrienne A. Harris.

Genesis Global Trading is a subsidiary of venture capital conglomerate Digital Currency Group Inc., which since its founding in 2015 had become one of the largest cryptocurrency firms in the United States. DCG found itself in trouble after Genesis Global Trading began to suffer in the wake of the collapse and bankruptcy of FTX Trading Ltd. in late 2022, which was the second-largest cryptocurrency exchange at the time.

The subsidiary is separate from Genesis Global Capital LLC, which filed for bankruptcy along with several other companies under its parent company Genesis Global Holdco LLC in January 2023. Genesis Global Capital was also swept up in a lawsuit from the Securities and Exchange Commission for being involved in a cryptocurrency lending program with Gemini Trust Co. LLC as part of Gemini Earn.

Although the company escaped the rash of bankruptcies, Genesis Global Trading shut down its United States spot crypto trading business in September, citing “business reasons.”

As part of the settlement, Genesis Global Trading will surrender its BitLicense. It was the only business under DCG’s corporate umbrella with the license. BitLicense is the common name for the license given by the NYDFS for companies to work in the state using virtual currencies, such as bitcoin, Ethereum and other cryptocurrencies. The company received its license in 2018.

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