Donald Trump

President Donald Trump

James

Several New York district attorneys have reportedly warned about the United States federal stablecoin law, the GENIUS Act, claiming it fails to adequately address fraud.
According to a Monday CNN report, New York Attorney General Letitia James and four district attorneys <a href="https://www.cnn.com/2026/02/02/business/stablecoin-genius-act-crypto?utm_source=business_ribbon" rel="noopener noreferrer nofollow" target="_blank">signed</a> onto a letter saying that the GENIUS Act will “provide legal cover” for stablecoin issuers to potentially participate in fraud.
The letter reportedly pointed a finger at issuers Tether and Circle, claiming that the companies have profited off crimes in stablecoin markets, specifically accusing Tether of only freezing some suspicious transactions in USDt (<a href="https://cointelegraph.com/tether-price-index" rel="noopener noreferrer nofollow">USDT</a>).
“The reality for many victims, therefore, is that funds stolen in or converted to USDT will never be frozen, seized, or returned,” said the letter, according to CNN. “They [Tether] currently decide on a case-by-case basis when they will assist law enforcement in recovering funds for victims, and nothing prevents them from stopping all reissuance entirely.”<iframe width="100%" height="315" src="https://www.youtube.com/embed/ry9MI57Pbjs?start=" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen loading="lazy" sandbox="allow-scripts allow-same-origin allow-popups allow-forms"></iframe>
Regarding Circle, the letter said the stablecoin issuer “claims to be an ally in the fight against financial fraud,” but its policies were “significantly worse than those of Tether for victims of fraud.”
Chief strategy officer Dante Disparte reportedly said Circle “has always prioritized financial integrity and advancing US and global regulatory standards for stablecoins,” adding:&nbsp;
<blockquote>
 “[The GENIUS Act] makes clear that stablecoin issuers must abide by applicable financial integrity rules for combating illicit activity, while enhancing clear consumer protection norms. We have followed prevailing rules as a US regulated financial institution, and we will continue to advance these standards.”
</blockquote>
Tether reportedly said that it “takes fraud, consumer harm, and the misuse of USDT extremely seriously and maintains a zero-tolerance policy toward illicit activity,” but the company did not have “a blanket legal obligation to comply with state-level civil or criminal processes in the way a US-regulated financial institution would.” The stablecoin issuer’s headquarters is in El Salvador.
Related: <a href="https://cointelegraph.com/news/trump-china-us-crypto-davos-wef" rel="noopener noreferrer nofollow">Trump: US has to ‘make it so that China doesn’t get the hold‘ of crypto</a>
The GENIUS Act, which was <a href="https://cointelegraph.com/news/stablecoin-genius-act-donald-trump-signing" rel="noopener noreferrer nofollow" target="_blank">signed into law</a> by US President Donald Trump in July, establishes a framework for payment stablecoins in the country. The legislation requires implementation 18 months after enactment or 120 days after regulators finalize related rules.
<h2 id="ny-ag-could-face-crypto-lawyer-challenger-in-2026">NY AG could face crypto lawyer challenger in 2026&nbsp;</h2>
Letitia James, who as of Monday had not made any public statements indicating she was not running for reelection as New York Attorney General this year, could face a challenger representing interests aligned with many in the crypto industry.&nbsp;
In November, former Coinbase policy lawyer Khurram Dara said he <a href="https://cointelegraph.com/news/lawyer-new-york-attorney-general-election-run" rel="noopener noreferrer nofollow">plans to run</a> as a Republican to unseat James, claiming that the attorney general had engaged in “lawfare” against the crypto industry in the state. Both potential candidates have an April 6 deadline to file.
Magazine: <a href="https://cointelegraph.com/magazine/meet-gracy-chen-tv-star-only-female-ceo-crypto-exchange/" rel="noopener noreferrer nofollow">Bitget’s Gracy Chen is looking for ‘entrepreneurs, not wantrepreneurs’</a>

NY prosecutors raise alarm over GENIUS Act on fraud: Report

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