The post Top New York prosecutors target stablecoin firms ‘profiting from fraud’ appeared on BitcoinEthereumNews.com.

New York prosecutors, Letitia James and Alvin Bragg, have written a letter to Congress detailing how the GENIUS Act helps stablecoin companies profit off stolen funds.  Tether and Circle reportedly earn billions in interest on stolen funds instead of turning over the assets to the authorities or returning them to the victims.  How does the GENIUS Act fail to protect cryptocurrency investors?  In a letter to Congressional leaders, CNN reports that New York Attorney General Letitia James and Manhattan District Attorney Alvin Bragg argued that the GENIUS law is a “gift” to crypto companies that are effectively “profiting from fraud.” The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law by President Trump in July 2025. It was designed to bring stability to stablecoins and requires companies to back up their coins with safe assets like cash or Treasury bills.  However, prosecutors say the law is missing a critical rule that forces companies to give stolen money back to victims. According to the letter, this “loophole” allows the two biggest stablecoin issuers, Tether (USDT) and Circle (USDC), to keep control of funds even after they have been flagged as stolen.  Notably, these companies hold billions of dollars in government bonds to back their coins, and as a result, they earn massive amounts of interest. Prosecutors estimate that in 2024 alone, both companies made roughly $1 billion in profit from these investments. Some of those profits come from the interest earned on money belonging to victims of hacks and “pig butchering” scams. Letitia James and Alvin Bragg pointed out that the GENIUS Act lacks “restitution” language. In traditional banking, if a bank is told by a court that funds are stolen, there are clear paths to return that money, but the GENIUS Act only focuses on…

---

Filed under: News - @ February 2, 2026 11:28 pm