Several New York district attorneys have raised concerns over the GENIUS Act, a federal stablecoin law, arguing it inadequately addresses fraud. According to a Monday CNN report, New York Attorney General Letitia James and four district attorneys signed a letter stating that the GENIUS Act could "provide legal cover" for stablecoin issuers to engage in fraudulent activities. They specifically implicated Tether and Circle in their claims, asserting that these companies have profited from crimes within stablecoin markets. The letter accused Tether of freezing only select suspicious transactions in USDt (USDT), leaving many victims unable to recover their stolen funds. "The reality for many victims... is that funds stolen in or converted to USDT will never be frozen, seized, or returned," the letter stated. It criticized Tether’s approach as being case-by-case, suggesting that the company can arbitrarily decide when to assist law enforcement in recovering funds. In contrast, Circle's policies were described as “significantly worse” for victims of fraud, despite the company claiming to fight against financial fraud. Circle's chief strategy officer, Dante Disparte, defended the company’s commitment to financial integrity and regulatory compliance, stating that the GENIUS Act clarifies that stablecoin issuers must adhere to rules combating illicit activity while enhancing consumer protection. Tether responded that it takes issues of fraud and consumer harm seriously, though it noted it isn't legally obligated to comply with state-level processes as a US-regulated financial institution would. The GENIUS Act, signed into law by former President Donald Trump, established a framework for payment stablecoins in the US, requiring implementation within 18 months or 120 days post-approval of related regulations by US agencies. The situation is further complicated by the potential political challenge facing Letitia James, with former Coinbase policy lawyer Khurram Dara announcing plans to run against her. This highlights the ongoing tension between regulators and the crypto industry, particularly in New York, where legal actions against crypto firms have become commonplace. As the debate over the GENIUS Act unfolds, the implications for stablecoin issuers and victims of fraud remain significant, showcasing the need for clearer regulations and accountability in the rapidly evolving crypto landscape.