Genesis Global Trading, a subsidiary of influential cryptocurrency conglomerate Digital Currency Group (DCG), has reached a settlement with New York's Department of Financial Services (DFS), which includes terminating its BitLicense, ceasing operations and paying an $8 million fine. For the Fortune report.
A New York regulator said its investigation into the company found significant weaknesses in its anti-money laundering and cyber security protocols.
“The agreement with the New York State Department of Financial Services concerns Genesis Global Trading Inc., which holds a virtual currency license with the NYDFS. The entity ceased operations in September 2023 and Genesis is in the process of voluntarily liquidating it for business reasons,” a Genesis spokesperson told Decrypt in an email. He has taken concrete steps to address historical shortcomings and I am happy to resolve this issue.”
Under the agreement, Genesis Global Trading will relinquish its BitLicense—a New York-specific crypto trading license—stop its New York-based operations and pay an $8 million fine.
DFS Superintendent Adrian Harris highlighted the potential risks to the company and its customers from not having a strong compliance framework in place.
“Jane's Global Trading's failure to comply with its operational compliance program demonstrated a disregard for the department's regulatory requirements and exposed the company and its customers to risks,” Harris told Fortune.
Genesis is one of the key portfolio companies that helped make DCG a key player in the US crypto industry. However, the company It was compounded by the collapse of the crypto market in 2022, which led to heightened regulatory scrutiny and eventual bankruptcy in early 2023.
While Genesis Global Trading was not directly involved in the bankruptcy or subsequent legal challenges facing DCG, it has felt the effects of its parent company's troubles. For example, in September, the company announced the closure of its over-the-counter trading platform in the US
The DFS action against Genesis Global Trading comes at a critical time for crypto regulation in New York. The state has been at the forefront of crypto regulation in the US, with the DFS being the only regulator providing a comprehensive framework for the industry. This move resulted in DFS's Gemini Earn program for Gemini Exchange, another BitLicense holder, which later faced legal challenges.
While the settlement reflects Genesis' cooperation and settlement efforts, it marks a pivotal moment in the ongoing debate over cryptocurrency regulation and control. It emphasizes the need for robust compliance strategies in the rapidly evolving and inherently risky domain of digital currency. As regulators and industry players continue to navigate this complex landscape, the Genesis case serves as a warning and blueprint for future regulatory actions.
Editor's Note: This article was written with the help of AI. Edited and fact-checked by Stacy Elliott. This story has been updated to add commentary from Genesis.
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