New York AG Letitia James reaffirms strict firm stance against crypto misconduct

As an experienced financial analyst, I have closely followed Letitia James’ tenure as New York Attorney General and her unwavering stance against non-compliant crypto firms. Her latest warning to the industry is a clear signal that she will not tolerate any breach of rules or regulatory shortcomings.

New York Attorney General Letitia James is urging the cryptocurrency sector to adhere to the same regulations as other industries.

In a May 25 post on her official X account, James stated, “We will go after those that don’t.”

See below.

Crypto companies must play by the same rules as everyone else.

We will go after those that don’t.

— NY AG James (@NewYorkStateAG) May 25, 2024

A history of enforcement

Since taking office in 2018, James has demonstrated a commitment to strict regulation of crypto firms through various enforcement actions. One notable instance occurred in 2019 when she launched a lengthy legal dispute with Tether, the issuer of the USDT stablecoin, and Bitfinex, the crypto exchange. The outcome of this confrontation resulted in a penalty totaling $18.5 million.

Additionally, she has initiated legal proceedings against businesses such as KuCoin and Coinseed. In the case of KuCoin, they reached a settlement worth $22 million in the final month of 2023.

By putting in considerable effort, James managed to make his office a significant player in overseeing the crypto industry and enforcing legal constraints upon those involved, with violators experiencing severe consequences as a result.

As a researcher following the developments in the cryptocurrency industry, I cannot stress enough the importance of adhering to regulatory guidelines. My team and I recently achieved a major milestone by securing a substantial $2 billion settlement with Genesis Global, a distressed crypto lender. This success underscores the necessity for companies in our sector to prioritize compliance.

A bankrupt firm that filed for Chapter 11 protection in January 2023 has been mandated by the court to refund approximately $3 billion in cash and digital currency to its clients as part of the liquidation process. This agreement, which is the largest settlement ever reached between New York state and a cryptocurrency company, was approved by the court.

Regulatory shortcomings

After the resolution of the dispute, James voiced her disappointment with the inadequate regulations in the crypto sphere. She remarked, “Once more, we witness the harmful repercussions and financial setbacks brought about by the absence of supervision and governance in the cryptocurrency sector.”

Approximately one-third of the resolution involves establishing a victim compensation fund for approximately 29,000 New York residents and other defrauded investors, totaling over $1.1 billion in investments via Genesis through the Gemini Earn program.

In October 2023, James accused Genesis of hiding substantial financial losses from its investors. But under the terms of the settlement, Genesis neither admits nor denies these claims.

The agreement reached mandated that Genesis, Gemini, and the Digital Currency Group halt their activities within New York State.

“Perhaps the most notable case for James in recent times involved former President and avid cryptocurrency supporter Donald Trump as the target.”

In March, a civil fraud lawsuit against Donald Trump, his adult sons, and The Trump Organization was successful for the 65-year-old plaintiff.

Trump was directed to shell out over $454 million in total, which consisted of approximately $355 million as penalties and about $98 million towards accrued interest.

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2024-05-26 18:34