#DCG settles for $38 million#

The U.S. Securities and Exchange Commission (SEC) charged Digital Currency Group (DCG) and its subsidiary Genesis Global Capital with concealing the true state of affairs by making false or misleading statements after a significant financial risk arose in 2022 due to Three Arrows Capital’s default. The SEC also fined DCG $38 million. The SEC alleges that DCG misled investors after Three Arrows Capital’s default, overstating Genesis’s financial condition and concealing the risks it faced. DCG admitted to the SEC’s allegations, but neither admitted nor denied any wrongdoing. Former Genesis CEO Michael Moro was also fined $500,000 for misleading investors. The incident stemmed from the collapse of Three Arrows Capital in 2022 amidst the Terra crypto ecosystem’s implosion, resulting in $2.4 billion in outstanding loans to Genesis, a company that DCG knew would lose at least $1 billion due to the fund’s collapse. Despite this, the SEC states that Genesis and DCG continued to present themselves as if their operations weren't threatened by these developments, when that was not the case. Ultimately, Genesis suspended withdrawals in November 2022 and filed for bankruptcy in January 2023. DCG paid the $38 million fine to settle the SEC charges and expressed its satisfaction at the resolution of the matter.