Genesis Global Trading, a subsidiary of Digital Currency Group, will pay $8 million to the state of New York after its financial regulator said the company violated rules by being vulnerable to illicit activity and cybersecurity threats.
Genesis Global Trading settled with the New York State Department of Financial Services on Friday, agreeing to cease operations in the state and surrender its BitLicense — a license for virtual currency activities in the state.
“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirements and exposed the company and its customers to potential threats,” NYDFS Superintendent Adrienne A. Harris said in a statement.
Multiple violations
After routine examinations and an enforcement investigation, NYDFS said it found that the firm failed to meet standards around anti-money laundering compliance, suspicious activity report filings and cybersecurity.
“The cybersecurity risk assessment completed by GGT in December 2022, itself years late, was not sufficiently comprehensive and did not include identification of areas, systems, or processes that required material improvement, updating, or redesign, or plans for 11 enhancing GGT’s cybersecurity program to achieve full compliance with the requirements of the Cybersecurity Regulation,” the regulator said in the consent order.
Fortune first reported on the news of the settlement.
According to a source familiar with the process, DCG is planning to file a motion to dismiss a lawsuit it has with the New York Attorney General’s office. The NYAG filed a complaint against Gemini Trust Company, Genesis Global Capital, LLC and its affiliates Genesis and Digital Currency Group in October for defrauding New York investors of more than $1 billion.
(With additional reporting assistance from Frank Chaparro)
Updated at 11:10 a.m. ET with information about DCG
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2024-01-12 15:52:14
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