Genesis Trading Moves $127M in Crypto Amid Bankruptcy Settlement

• Genesis has moved $87M in ETH and $40M in BTC as part of its bankruptcy settlement with New York State
• This move is part of a $2 billion settlement addressing losses from the Gemini Earn program
• The case highlights growing scrutiny and regulation in the crypto space, with significant legal actions and settlements

Recently, Genesis Trading made huge transfers of ETH and BTC to meet a $2 billion settlement with New York State. This deal followed the company’s bankruptcy due to the collapse of big players like Three Arrows Capital and FTX. Specifically, Genesis moved 27,500 ETH and 12,500 ETH in various transactions, and it had already sent over 12,600 BTC in previous months.

Massive Crypto Transfers by Genesis Trading

According to Arkham Intelligence data, a cryptocurrency wallet linked to Genesis Trading moved 27,500 ETH to a wallet starting with: 0xcbCF. These transfers were worth about $87.09 million. At around the same time, the Genesis-linked wallet sent 12,500 ETH to another address starting with 0x72FE, worth $39.59 million. These transfers happened during the early hours of the Asian market on Friday.

Genesis Trading filed for Chapter 11 bankruptcy in the U.S. in January 2023. This move came after the collapse of major players in the industry: the hedge fund Three Arrows Capital and the exchange FTX, which caused big losses for Genesis. Genesis had also moved over 12,600 Bitcoin worth around $719.9 million between June and July, mostly in transactions of 500 to 700 BTC.

Legal Fallout and Settlement in the Crypto World

The big Bitcoin and Ethereum transfers are due to an agreement Genesis made with New York State in May. According to this deal, Genesis has to pay $2 billion to “defrauded” investors through the Earn program.

The “scam” related to Gemini’s Earn program is a notable case in the crypto world. Gemini, the exchange founded by the Winklevoss twins, launched the Gemini Earn program with Genesis Global Capital. This program let users “lend” their cryptocurrencies to Genesis for interest.

But when Genesis was hit by the collapse of big industry names like FTX and Three Arrows Capital, it paused withdrawals and then went bankrupt in January 2023. Customers who had lent their funds couldn’t withdraw them, leading to significant losses.

The key issue here is that many users weren’t fully aware of the risks involved in lending their cryptocurrencies through Genesis. When Genesis failed, the funds of Gemini Earn users were also locked up, leading to various legal actions and criticism of the program’s management.

In short, it’s not a real “scam” but rather a mix of poor risk management by Genesis and a lack of transparency about the risks to Gemini Earn users.

The $2 billion settlement is reportedly the largest ever against a crypto company in New York State. The New York Attorney General also plans to increase oversight and regulation of the digital asset sector, which has already brought in over $2.5 billion from crypto platforms.

A lawsuit has been filed against Genesis, the Digital Currency Group, its CEO Barry Silbert, and former Genesis CEO Soichiro Moro. The New York Attorney General’s office has also sued former Celsius CEO Alex Mashinsky for hiding the “terrible financial conditions” of the platform. Mashinsky is currently facing criminal charges related to securities fraud, wire fraud, and conspiracy to commit fraud, with the trial expected to start in January 2025.

Conclusion

In short, Genesis Trading is working to make things right after its bankruptcy by moving massive amounts of crypto, as part of a deal with New York to compensate investors. This highlights the ongoing challenges in the crypto world and the increasing regulations reshaping the industry.