Genesis Global Trading Faces $8 Million Penalty for Compliance Failures



by FARUK IMAMOVIC

Genesis Global Trading Faces $8 Million Penalty for Compliance Failures
© Getty Images/Michael M. Santiago

New York State's Department of Financial Services (DFS) has announced a significant enforcement action against Genesis Global Trading, Inc., imposing an $8 million penalty for failing to comply with virtual currency and cybersecurity regulations.

Breaches in Regulatory Standards

Genesis Global Trading, a prominent player in the virtual currency market, was found to have significant failings in its compliance programs. These failings violated DFS’s stringent regulations, leaving the company and its customers exposed to potential illicit activities and cybersecurity threats.

The company's shortcomings were uncovered in routine examinations and an enforcement investigation, revealing inadequacies in areas such as Anti-Money Laundering compliance, transaction monitoring, and cybersecurity. Superintendent Adrienne A.

Harris emphasized the importance of DFS's regulations as a gold standard in safeguarding consumers and institutions from bad actors. She expressed disappointment in Genesis Global Trading's disregard for these regulatory requirements.

DFS’s Ongoing Efforts in Virtual Currency Regulation

Under Superintendent Harris, DFS has been at the forefront of virtual currency regulation, setting benchmarks for prudential regulation both nationally and internationally.

The Department’s VOLT initiative has significantly bolstered its oversight capabilities, with the addition of over 60 experts specializing in various areas such as financial crimes and cybersecurity. This initiative is part of DFS's broader strategy to adapt to the evolving landscape of virtual currency and its associated risks.

DFS's regulatory efforts have extended beyond domestic boundaries, engaging with global regulators to develop a comprehensive framework for virtual currency. This approach includes issuing innovative regulatory guidance and being the first to address major issues in the cryptocurrency space, such as the regulation of stablecoins and the handling of virtual currency insolvencies.

Genesis Global Trading's Future

Genesis Global Trading was licensed by DFS to conduct virtual currency business in New York State in 2018.

As part of the settlement with DFS, the company will surrender its BitLicense and is in the process of ceasing operations. This action marks a significant development in the regulatory landscape of virtual currency and underscores the importance of adherence to regulatory standards in this rapidly evolving sector.

New York