Genesis Global Trading Settles with NYDFS for $8M

• Cryptocurrency firm Genesis Global Trading has settled with the New York Department of Financial Services (NYDFS), agreeing to forfeit its BitLicense and pay an $8 million penalty due to significant failings in its Anti-Money Laundering and cybersecurity programs.
• The settlement follows an investigation, and the NYDFS emphasized that it only pertains to Genesis Global Trading, not its sibling entity, Genesis Global Capital.

Cryptocurrency firm Genesis Global Trading has recently found itself in hot water as it agreed to a settlement with the New York Department of Financial Services (NYDFS). The consequence? Genesis will forfeit its BitLicense and pay a substantial $8 million penalty.

In an official announcement on January 12, Genesis Global Trading acknowledged its agreement with NYDFS terms. The settlement involves not only a significant financial penalty but also a halt to its operations within the state of New York. The firm, which had held its BitLicense since 2018, faced scrutiny from the NYDFS following an investigation that uncovered “significant failings” in Genesis’ Anti-Money Laundering (AML) and cybersecurity programs.

Genesis Global Trading’s Compliance Failure

NYDFS Superintendent Adrienne Harris expressed concern over Genesis Global Trading’s failure to maintain a functional compliance program, stating that it demonstrated a disregard for the regulatory requirements set by the department. This lapse not only jeopardized the company but also exposed its customers to potential threats.

A notable distinction was made in the NYDFS announcement, emphasizing that the settlement specifically affected Genesis Global Trading and not its sibling entity, Genesis Global Capital. This separation is crucial, especially considering the ongoing legal challenges within the cryptocurrency space.

Ceasing Operations and Addressing Concerns

Genesis Global Trading, which was not part of its parent company’s Chapter 11 bankruptcy protection filing in January 2023, ceased operations in September of the same year. A company spokesperson highlighted that significant measures had been taken to address the issues raised by NYDFS, showcasing a commitment to rectifying the situation.

It’s worth noting that Genesis Global Trading’s settlement comes in the wake of concerns raised by New York’s Office of the Comptroller regarding the management of NYDFS’ BitLicense applicants. The cryptocurrency firms operating in the state have been obligated to apply for a BitLicense through the regulator since 2015, and this recent development could prompt a closer examination of compliance within the industry.

In a broader context, the cryptocurrency sector continues to grapple with regulatory challenges, emphasizing the need for robust compliance frameworks to navigate the evolving legal landscape. Genesis Global Trading’s settlement serves as a cautionary tale for other industry players, highlighting the repercussions of lax AML and cybersecurity measures.