After settling with the U.S. Securities and Exchange Commission (SEC), Genesis Global has reportedly reached an agreement to settle with the Office of the New York Attorney General. The official had accused the company, along with its parent company Digital Currency Group and Gemini, regarding “fraudulent schemes” associated with its lending platform.
Court Filing Shows Genesis Settled With NYAG, Aims to End Crypto Lending Platform Dispute
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Genesis and NYAG Reach Agreement, According to Bankruptcy Motion
Although the New York Office of the Attorney General has yet to formally declare a settlement and has even broadened the lawsuit as per a press release issued on Friday, a court document reveals that Genesis’s legal representatives have announced a settlement agreement. Nonetheless, this settlement requires the approval of the bankruptcy court, with the proposed court motion submitted by the law firm Cleary Gottlieb Steen & Hamilton LLP.
“As set forth more fully in the settlement motion, the debtors have determined, in their business judgment, that the settlement agreement is fair and equitable, reasonable, and in the best interests of the debtors’ estates,” the court filing declares. “The treatment and amount of the allowed NYAG claims is reasonable in comparison to the potential risk of an adverse judgment following litigation of the NY action, which could result in civil penalties, disgorgement, and pre-judgment interest far in excess of the allowed NYAG claims.”
Genesis’s attorneys argue that, if sanctioned, the settlement will enable the debtors to sidestep the significant expenses associated with lengthy and intricate litigation against the NYAG. Furthermore, the agreement would allow Genesis and its advisors to allocate their resources and focus on addressing other claims, securing confirmation of the Chapter 11 plan, and initiating distributions to creditors. Consequently, Genesis is advocating for a swift approval of the settlement motion.
The bankruptcy strategy of Genesis is now under scrutiny, with objections coming directly from its parent entity, Digital Currency Group (DCG). This crypto heavyweight DCG contends that Genesis’ Chapter 11 restructuring plan is biased, benefiting a specific set of creditors. Additionally, on Friday, New York Attorney General Letitia James expanded her complaint against the consortium of companies, following the emergence of additional investors.
“After months of false promises, we pulled the curtain back and revealed that DCG was lying to investors and defrauding them out of billions,” James stated on Friday.
Will Genesis be able to settle its legal troubles with NYAG Letitia James? Let us know what you think about this subject in the comments section below.
