Genesis Global Trading Faces $8 Million Penalty and Surrenders BitLicense Amidst Regulatory Scrutiny

Cryptocurrency firm Genesis Global Trading has agreed to pay an $8 million penalty and surrender its BitLicense following a settlement with the New York Department of Financial Services (NYDFS). The settlement comes after an investigation revealed significant failings in Genesis’ Anti-Money Laundering (AML) and cybersecurity programs, rendering the company susceptible to illicit activities and cybersecurity threats.

Under the leadership of Superintendent Adrienne A. Harris, NYDFS has imposed its first penalties against virtual currency companies, totaling more than $140 million, signaling a commitment to stringent regulation in the crypto space. Genesis Global Trading, a subsidiary of Digital Currency Group (DCG), is distinct from Genesis Global Capital, which faced bankruptcy amid the cryptocurrency exchange FTX’s collapse.

The NYDFS investigation found that Genesis Global Trading failed to meet required standards in Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance, transaction monitoring, Suspicious Activity Report (SAR) filings, Office of Foreign Assets Control (OFAC) screening, and cybersecurity. Superintendent Harris emphasized that the lapse in maintaining a functional compliance program jeopardized both the company and its customers.

As part of the settlement, Genesis Global Trading will relinquish its BitLicense, a unique registration for crypto businesses in New York. The firm, licensed since 2018, has also agreed to cease operations in the state. This resolution follows the NYDFS’s continued efforts to enhance regulatory oversight in the rapidly evolving cryptocurrency industry.

Genesis Global Trading is a key player in the American crypto industry and a subsidiary of DCG. While not directly implicated in DCG’s bankruptcy, Genesis Global Trading faced repercussions, including the closure of its over-the-counter trading platform in the U.S. in September 2023. The $8 million penalty reflects the importance of robust compliance mechanisms in the dynamic and risk-laden realm of digital currencies.