#DCG Settles with SEC for $38 Million#

The Securities and Exchange Commission (SEC) has charged Digital Currency Group (DCG) and its subsidiary, Genesis Global Capital, with concealing the true state of affairs by issuing false or misleading information in 2022, after a default by Three Arrows Capital created significant financial risks for the company. The SEC fined DCG $38 million. The SEC alleges that DCG misled investors, overstated its financial health, and concealed the true risks associated with Genesis after the latter began to experience financial troubles. Specifically, the SEC alleges that in mid-June 2022, when a large borrower (Three Arrows Capital) failed to make its margin call, causing a significant financial loss for Genesis, DCG downplayed the impact of the default and exaggerated the efforts it was making to help Genesis. The SEC also alleges that Michael Moro, then-CEO of Genesis, was aware of the relevant risks but approved the issuance of false statements claiming that the company's financial position was "strong" and inflated the balance sheet with a $1.1 billion promissory note, failing to disclose key terms to investors. Ultimately, Genesis suspended withdrawals in November 2022 and filed for bankruptcy in January 2023. DCG settled these charges without admitting or denying them.