$2B New York settlement to maximize recoveries for bankrupt crypto firm investors

May 20 (UPI) -- New York state has secured a $2 billion settlement with a bankrupt cryptocurrency firm, which will help "maximize recoveries for investors," New York Attorney General Letitia James' office confirmed Monday.

James secured the deal with Genesis Global Capital, Genesis Asia Pacific and their holding company after the firm filed for bankruptcy protection in U.S. Bankruptcy Court for the Southern District of New York.

The settlement was approved by the bankruptcy court, becoming the largest against a cryptocurrency company in New York state history.

The money will go directly to the at least 29,000 investors who contributed to the company's Gemini Earn investment program.

The crypto firm led its investors to believe the program was low-risk.

"However, OAG's investigation found that Gemini's internal analyses of Genesis showed that the company's financials were risky," James said last October, when her office initially filed suit against the company.

The lawsuit filed by New York state also contended "Gemini knew Genesis' loans were undersecured and at one point highly concentrated with one entity, Sam Bankman-Fried's Alameda, but did not reveal this information to investors."

Defrauded investors contributed more than a collective $1.1 billion to the investment program.

"When investors suffer losses because of fraud and manipulation, they deserve to be made whole," James said in a statement issued by her office Monday.

"This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice. Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve."

James has championed a crackdown on the practice, securing more than $2.5 billion from predatory cryptocurrency platforms since taking office in 2022.