DCG and Genesis Face $38M SEC Penalty Over Misleading Financial Disclosures
by aria-crypto.com
January 18, 2025 at 00:18
DCG and Genesis Face $38M SEC Penalty Over Misleading Financial Disclosures
Digital Currency Group (DCG) and its subsidiary Genesis have agreed to pay $38 million to settle charges by the U.S. Securities and Exchange Commission (SEC) for misleading investors about their financial health.
The SEC's investigation revealed that DCG and Genesis, under the leadership of former CEO Soichiro "Michael" Moro, misrepresented the risks and financial stability following the collapse of a major borrower, Three Arrows Capital (3AC), in mid-2022.
Moro was specifically accused of making false public statements that claimed Genesis had mitigated the risks associated with 3AC's default and maintained a robust balance sheet, despite the company's deteriorating financial situation.
The settlement includes a $38 million fine against DCG and a $500,000 fine against Moro, who is also barred from any future conduct that could potentially mislead investors.
Additionally, the SEC issued a cease-and-desist order to prevent further violations and indicated the findings could bolster ongoing investor lawsuits and regulatory actions.
Investigations continue as financial pressures mount on Genesis, which suspended withdrawals and filed for Chapter 11 bankruptcy in January 2023 after revealing significant debts.
The case underscores the SEC's increased scrutiny of cryptocurrency firms and the importance of transparent and accurate financial reporting in protecting investors.
This enforcement action is part of a broader regulatory effort to ensure stability and accountability in the rapidly evolving digital asset market.
DCG's previous attempts to portray financial stability amid undisclosed billion-dollar losses at Genesis were highlighted as fundamentally misleading.
As the legal and regulatory landscape tightens, the cryptocurrency sector faces continued challenges and scrutiny to uphold fairness and transparency.
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