Digital Currency Group (DCG) and its former Genesis subsidiary CEO, Soichoro 'Michael' Moro, have agreed to pay the US Securities and Exchange Commission (SEC) a combined $38.5 million to resolve securities fraud charges. DCG will pay $30 million, while Moro will pay $500,000. Both parties have also agreed to a cease-and-desist order without admitting to any wrongdoing. The charges relate to DCG and Genesis' response to the summer 2022 collapse of crypto hedge fund Three Arrows Capital, which caused a significant financial shortfall for Genesis.
According to a DCG spokesperson, the company has 'always strived to conduct its business with the highest integrity' and believes its actions regarding Genesis align with this approach. Regulators, including New York Attorney General Letitia James, had accused DCG and Genesis of collaborating to conceal the financial gap by falsely claiming DCG had absorbed Genesis' losses. The SEC found that DCG and Moro failed to provide truthful information to the public, instead presenting a misleadingly positive picture of Genesis' financial condition.
The SEC's Division of Enforcement Acting Director, Sanjay Wadhwa, emphasized the importance of transparency, especially during times of financial instability. The settlement comes as James' ongoing civil case against DCG seeks $3 billion in penalties.