Multiple prosecutors in New York accuse the GENIUS Act of enabling stablecoin issuers to profit from fraud

Foresight News reports that, according to CNN, five prosecutors including New York State Attorney General Letitia James and Manhattan District Attorney Alvin Bragg jointly sent a letter stating that the GENIUS Act signed last July failed to effectively protect scam victims and provided legal cover for stablecoin issuers “to profit from fraud.” The prosecutors stated in the letter that while the law grants legitimacy to stablecoins, it allows issuing companies to bypass key regulatory requirements necessary to combat terrorism financing, money laundering, and crypto fraud. The letter specifically named Tether and Circle, accusing both companies of poor performance in assisting law enforcement to seize and return funds, and of profiting through investments in frozen stolen funds. Data in the report shows that in 2024, Circle and Tether each profited approximately $1 billion through investments in reserves (including reserve assets supporting stolen funds). As of November last year, Circle’s frozen funds exceeded $114 million.