Bankrupt company Genesis Global Trading has been heavily fined $8 million by the New York State Department of Financial Services (NYDFS). The settlement comes after an in-depth investigation revealed the company’s vulnerabilities in cybersecurity and regulatory compliance.
Genesis, a subsidiary of Digital Currency Group (DCG), has agreed to the major settlement with NYDFS. As part of the agreement, the company will suspend its operations in New York state and surrender its BitLicense, a crucial license for conducting virtual currency activities in the state.
NYDFS took enforcement action against Genesis due to its failure to comply with strict anti-money laundering regulations and maintain robust cybersecurity measures. This non-compliant behavior not only exposed the company to illegal activities but also posed significant threats to its customers. Adrienne A. Harris, the superintendent of NYDFS, emphasized the seriousness of the situation, highlighting Genesis’ disregard for regulatory standards and the potential risks associated with it.
NYDFS conducted a thorough investigation of Genesis, uncovering a series of compliance issues, particularly in anti-money laundering compliance, suspicious activity reporting, and cybersecurity. A cybersecurity risk assessment completed in December 2022 was deemed delayed and insufficiently comprehensive. Regulatory authorities believed that the assessment failed to identify key areas for improvement or plans to enhance the company’s cybersecurity framework, leading to this punitive action.
Sources indicate that DCG is planning to file a motion to dismiss the lawsuit brought by NYDFS. The lawsuit accuses Gemini Trust Company, Genesis Global Capital, LLC, and their subsidiaries of defrauding New York investors of over $1 billion. The latest settlement with NYDFS adds a new dimension to the company’s litigation.
As Genesis Global Trading restructures its operations, the entire industry closely watches how this will shape the future of cryptocurrency regulation and enforcement.
DCG, Gemini, Genesis, NYDFS.