New York Attorney General Letitia James has reiterated her firm stance on cryptocurrency industry misconduct, warning crypto firms to “play by the same rules as everyone else” or face legal action. In a May 25 post on her official X account, James stated, “We will go after those that don’t.”
A History of Rigorous Enforcement
Since taking office in 2018, James has established a reputation for stringent enforcement against crypto firms. In 2019, she launched a high-profile legal battle with USDT stablecoin issuer Tether and the Bitfinex crypto exchange, resulting in an $18.5 million fine. Additionally, James has targeted companies like KuCoin and Coinseed, with KuCoin agreeing to a $22 million settlement in December 2023. These actions have cemented her office as a powerful regulatory force in the crypto sector, ensuring that companies do not operate outside the law without facing significant consequences.
Recent Major Settlement
James’ latest warning follows her office’s significant $2 billion settlement with troubled crypto lender Genesis Global. Genesis, which filed for Chapter 11 bankruptcy in January 2023, has been ordered to return approximately $3 billion in cash and cryptocurrency to its customers as part of a court-approved liquidation. This settlement marks the largest ever reached between the state of New York and a crypto company.
Following the settlement, James voiced her frustration with the crypto industry’s regulatory shortcomings. She stated, “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.” Part of the settlement includes the creation of a victims’ fund to assist defrauded investors, including 29,000 New Yorkers who had invested over $1.1 billion in Genesis through the Gemini Earn scheme.
James pursued Genesis in October 2023, alleging that the company had concealed significant losses from its investors. However, under the settlement terms, Genesis has not admitted to nor denied these allegations. The settlement also stipulated that Genesis, Gemini, and the Digital Currency Group would cease operations in New York.
Broader Regulatory Context
James’ approach to crypto regulation has included several high-profile cases. Notably, she secured a civil fraud lawsuit victory in March against former President Donald Trump, his adult sons, and The Trump Organization. Trump was ordered to pay $454 million, including $355 million in penalties and nearly $100 million in interest. This case underscored James’ commitment to holding powerful figures accountable within the crypto space.
Conclusion
Attorney General Letitia James continues to set a rigorous precedent for the cryptocurrency industry, emphasizing the necessity for strict regulation and accountability. Her ongoing efforts aim to protect investors and maintain the integrity of the financial system, signaling to crypto firms that misconduct will not be tolerated.
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