Digital Currency Group (DCG), founded by Barry Silbert, and Soichiro "Michael" Moro, the former CEO of Genesis Global Capital, will pay $38.5 million in civil penalties to the SEC for misleading investors.
The SEC announced on Friday that the penalties settle charges related to misrepresentations about Genesis’s financial condition. Genesis, a key DCG subsidiary, filed for Chapter 11 bankruptcy in January 2023, following the FTX collapse that destabilized the crypto industry.
Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, emphasized the importance of truthful communication during financial instability, stating that DCG and Moro presented an overly optimistic view instead of addressing their financial struggles transparently.
The violations trace back to June 2022 when crypto hedge fund Three Arrows, a major borrower, defaulted on a margin call, severely impacting Genesis’s business. The SEC revealed that DCG and Moro downplayed the loss in social media posts shared by executives.
DCG expressed satisfaction with the resolution, stating in an email that they have always aimed to operate with integrity and are now focused on growth initiatives.
While paying the penalties, DCG and Moro neither admitted nor denied the SEC’s findings of violations under the Securities Act of 1933.
Separately, in May 2024, New York Attorney General Letitia James settled with Genesis for $2 billion to compensate defrauded investors.
