Genesis Trading exits New York market after NYDFS settlement

abdelaziz Fathi

Genesis Global Trading has reached a settlement with the New York Department of Financial Services (NYDFS), agreeing to pay an $8-million penalty and cease its operations in New York.

As part of the settlement, the U.S.-focused spot crypto trading business will surrender its BitLicense, which it has held since 2018.

The settlement comes after an investigation by New York authorities revealed “significant failings” in Genesis’ Anti-Money Laundering (AML) and cybersecurity programs. NYDFS Superintendent Adrienne Harris highlighted the firm’s failure to maintain an effective compliance program, which she noted not only disregarded regulatory requirements but also “exposed the company and its customers to potential threats.”

Genesis was a major provider of trading services to institutional clients before encountering challenges last year. That said, the settlement specifically involves Genesis Global Trading, a distinct entity from Genesis Global Capital. The latter, along with Gemini and Digital Currency Group, was the subject of a lawsuit filed by New York’s attorney general in October, alleging investor fraud in the Gemini Earn program.

Genesis Global Trading’s decision to exit the New York market follows its parent company’s filing for Chapter 11 bankruptcy protection in January 2023. However, GGT was not included in the bankruptcy proceedings. The firm had already ceased operations in September 2023 and, according to a spokesperson, had taken “substantial measures” to address the concerns raised by the NYDFS.

Since 2015, crypto firms operating in New York have been required to obtain a BitLicense through the NYDFS, a regulation that has been a subject of debate and concern among industry players.

The settlement comes nearly four months after GGT decided to halt all its trading operations. The move follows the recent closure of its U.S. desk and extends to its international spot and derivatives trading operations as well.

GGT is part of the Genesis conglomerate but managed to avoid bankruptcy earlier this year, which affected other Genesis-linked firms. Genesis had previously launched the world’s first Bitcoin OTC trading desk in 2013 and has grown into one of the largest in the industry, managing large spot volume and serving over 1,000 institutional clients.

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