Superintendent Harris Announces $8 Million Penalty Against Genesis Global Trading, Inc. After DFS Investigation Finds Significant Failings in Anti-Money Laundering and Cybersecurity Programs
New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris today announced that Genesis Global Trading, Inc. (“Genesis Global Trading”) will pay an $8 million penalty to New York State for compliance failures that violated DFS’s virtual currency and cybersecurity regulations and left the company vulnerable to illicit activity and cybersecurity threats. Under Superintendent Harris, the Department has imposed its first penalties against virtual currency companies, to date levying more than $140 million to hold companies accountable.
“DFS’s virtual currency and cybersecurity regulations are often cited as the gold standard, providing clear and stringent requirements to protect consumers and safeguard institutions from bad actors,” said Superintendent Harris. “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.”
Following routine examinations and a subsequent enforcement investigation, the Department 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.
Genesis Global Trading, Inc. is a separate entity from Genesis Global Capital, LLC. Genesis Global Trading, Inc. is the only Genesis entity that was licensed by the Department and was not involved in the Gemini Earn program.
Today, DFS continues to set the bar for prudential regulation of virtual currency. From Illinois and California, to the federal level, to the United Kingdom, the European Union, the United Arab Emirates, and Singapore, DFS is engaged with regulators around the world seeking to build a regulatory framework that leverages DFS’s expertise and experience.
Through Superintendent Harris’ VOLT initiative, the Department has added more than 60 experts to oversee licensing and strengthen supervision, including seasoned experts specializing in Bank Secrecy Act/Anti-Money Laundering laws and regulations, accounting oversight, financial crimes, data governance, cybersecurity, and more. The Department has enhanced existing and established new policies and procedures and enacted new assessment authority to support the continued growth of the virtual currency unit.
To address emerging issues, DFS has issued eight pieces of innovative industry regulatory guidance, including first-in-the-nation regulatory guidance setting foundational criteria for USD-backed stablecoins issued by DFS-regulated entities, guidance to better protect customers in the event of a virtual currency insolvency, and guidance for establishing the use of blockchain analytics tools as a best practice. Under Superintendent Harris, DFS brought its first supervisory and enforcement actions against cryptocurrency companies. Notably, the Department was the first regulator in the world to address Binance, ordering Paxos to cease minting Paxos-issued BUSD, and negotiated one of the largest virtual currency settlements in the world with Coinbase, Inc.
Genesis Global Trading was licensed by the Department to engage in virtual currency business activity in the State of New York in 2018. In connection with the settlement, Genesis Global Trading will surrender its BitLicense and is in the process of ceasing operations.
- Read the Genesis Global Trading consent order (PDF).