SEC fines DCG $38M over alleged investor fraud, sanctions Genesis CEO for negligence
The US Securities and Exchange Commission (SEC) initiated enforcement actions against Digital Currency Group (DCG) and its subsidiary Genesis, imposing a $38 million civil penalty and a cease-and-desist order. The SEC accused DCG and former CEO Soichiro “Michael” Moro of misleading investors regarding the financial health of Genesis following the collapse of Three Arrows Capital (3AC). The SEC claims DCG executives were aware of over $1 billion in losses but misrepresented Genesis as financially stable through misleading public statements and tweets. A $1.1 billion promissory note was executed to inflate Genesis's balance sheet without actual capital transfer. Genesis suspended withdrawals in November 2022 and filed for bankruptcy in January 2023. Moro was fined $500,000 and barred from misleading conduct, with his actions impacting related investor claims.
