trading firm Genesis Global Trading, Inc. has ceased operations after agreeing to pay an $8 million penalty and surrendering its licenses to New York state regulators. The New York State Department of Financial Services (DFS) found that the company had violated multiple financial industry rules, leading to compliance failures and leaving it vulnerable to illicit activity and cybersecurity threats, including money laundering. The DFS detailed how Genesis Global Trading violated the terms of its BitLicense, New York’s permit for operating a virtual currency business. While the consent order did not specify cyber threats, it highlighted the company’s deficient cybersecurity risk assessment and inadequate consideration of cybersecurity risks to its business operations.
The company’s website now displays a message stating, “Genesis Global Trading, Inc., is no longer an active business.” The consent order reveals that the required cybersecurity risk assessment submitted by the company in December 2022 was years late, not sufficiently comprehensive, and did not adequately consider cybersecurity risks. Although DFS did not specify accusations of money laundering by customers, it noted serious deficiencies in Genesis Global Trading’s filing of suspicious activity reports (SARs), with the number of reports not commensurate with the level of transactions, raising concerns about the effectiveness of its suspicious activity detection measures. The decision to shut down comes after the DFS imposed the fine, emphasizing the importance of cybersecurity protections and regulatory compliance in the cryptocurrency trading industry.
The consent order does not detail specific cyber threats against Genesis Global Trading but underscores the broader issues of cybersecurity vulnerabilities, late risk assessments, and deficient suspicious activity reporting. The closure of the cryptocurrency trading firm highlights the regulatory scrutiny faced by companies operating in the digital asset space, emphasizing the need for robust cybersecurity measures and compliance with financial industry rules to protect consumers and mitigate risks associated with illicit activities like money laundering. The case adds to the ongoing discussions around regulatory frameworks for virtual currency businesses, with the DFS asserting its role in overseeing BitLicenses to ensure consumer protection and cybersecurity safeguards.
Reference:
- Superintendent Adrienne A. Harris Announces $8 Million Penalty Against Genesis Global Trading, Inc.
- Genesis Global Trading, Inc., is no longer an active business.
