DCG settles SEC case, pays $38 million over alleged negligence
Digital Currency Group (DCG), a global investment firm, has agreed to pay $38 million to settle charges brought by the U.S. Securities and Exchange Commission (SEC).
The SEC accused DCG of misleading investors regarding the financial health of its subsidiary, Genesis Global Capital, following the 2022 default of a major borrower, Three Arrows Capital (3AC), reports The Block.
The SEC alleged that DCG negligently downplayed the impact of 3AC’s failure to meet a margin call in mid-June 2022, which severely disrupted Genesis' operations. In a statement, the SEC noted that DCG and Genesis executives understated the risks tied to 3AC’s default and misrepresented their efforts to stabilize the situation. Former Genesis CEO Soichiro "Michael" Moro also settled with the SEC, agreeing to pay $500,000 over his role in publishing misleading statements on social media.
History of regulatory scrutiny
DCG has faced ongoing regulatory challenges, including a lawsuit filed by the New York State Attorney General in October 2024. The lawsuit accused DCG, Genesis, and the crypto exchange Gemini of defrauding over 29,000 New Yorkers of more than $1 billion through deceptive practices related to Gemini’s crypto lending program.
Genesis filed for bankruptcy in 2023, revealing liabilities of up to $10 billion owed to over 100,000 creditors. The company completed its restructuring in August 2024.
In its settlement announcement, DCG emphasized its commitment to integrity, stating, "We are pleased to have concluded this investigation and remain focused on our growth."
The settlement underscores the SEC’s intensified scrutiny of the crypto industry, with a focus on transparency and investor protection. As DCG aims to rebuild its reputation, the case highlights the growing regulatory pressure on crypto firms to maintain robust disclosure practices and accountability.
Additionally, the SEC may halt non-fraud cases as crypto regulation intensifies.
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