Genesis Global Trading, a notable player in the sector, has finalized a settlement with the New York Department of Financial Services (NYDFS). This agreement marks a significant turn for the firm, as it concludes its business operations in New York State. Under the terms of the settlement, Genesis Global Trading will pay a penalty of $8 million to the NYDFS. Furthermore, the firm has agreed to surrender its BitLicense, a critical regulatory requirement for crypto operations in New York, initially obtained in 2018.
The Roots of the Settlement
The settlement decision emerges from an exhaustive investigation led by New York authorities. The probe uncovered substantial deficiencies in Genesis Global Trading’s Anti-Money Laundering (AML) and cybersecurity frameworks. These inadequacies led to the conclusion that the firm’s compliance program was not up to par with the regulatory standards set by the NYDFS.
Adrienne Harris, the NYDFS Superintendent, emphasized the serious nature of these shortcomings. The lack of a robust compliance mechanism posed risks not only to the company but also to its clientele, she noted. The NYDFS’s findings led to decisive action to ensure regulatory compliance and safeguard the interests of investors and customers.
Impact and Future Actions
The resolution of this case has significant implications. First, it highlights the rigorous enforcement of regulations in the New York crypto market. Secondly, it underscores the need for firms in the sector to maintain stringent AML and cybersecurity measures.
It’s crucial to note that Genesis Global Trading is distinct from Genesis Global Capital. The latter faced legal challenges in October from New York’s attorney general. This lawsuit involved accusations of investor fraud through the Gemini Earn program, involving Gemini and Digital Currency Group as well.
Despite the bankruptcy filing of its parent company, Digital Currency Group, in January 2023, Genesis Global Trading maintained its operational independence. The firm ceased its operations in September 2023. According to a company spokesperson, Genesis Global Trading had already been working diligently to rectify the issues identified by the NYDFS.
This settlement with Genesis Global Trading coincides with broader concerns raised by New York’s Office of the Comptroller about the management and oversight of BitLicense applicants. Since 2015, crypto firms looking to operate in New York State have been mandated to secure a BitLicense, reflecting the state’s commitment to a regulated and secure cryptocurrency market.