#DCG Settles $38 Million Fine#

The U.S. Securities and Exchange Commission (SEC) has fined Digital Currency Group (DCG) $38 million for "negligence" and misleading investors about the financial condition of its subsidiary, Genesis Global Capital. The SEC alleged that DCG concealed losses and made misleading public statements during Genesis's financial turmoil in 2022, including covering up a $1.1 billion promissory note, which was a sign of Genesis's impending bankruptcy. Genesis was hit hard in June 2022 by the failure of large borrower Three Arrows Capital (3AC) to repay margin loans, ultimately leading to Genesis filing for bankruptcy in January 2023. Even though DCG was aware that Genesis would lose at least $1 billion due to 3AC's collapse, DCG continued to downplay the impact of 3AC's collapse and exaggerate DCG's efforts to help Genesis, misleading investors. DCG settled these charges, neither admitting nor denying them. Additionally, former DCG CEO Michael Moro agreed to pay a $38.5 million civil penalty to the SEC to settle charges of securities fraud related to the 2022 3AC collapse. The settlement is part of the SEC's regulatory scrutiny of the crypto industry, aimed at combating fraud and ensuring transparency from crypto companies to investors.