Digital Currency Group (#DCG ) and former CEO of Genesis, Michael Moro, have just agreed to pay $38 million to settle allegations from the U.S. Securities and Exchange Commission (SEC). The allegations revolve around DCG hiding serious financial risks related to Genesis Global Capital, the lending unit that went bankrupt.

The Case Started in June 2022

According to SEC documents, in mid-2022, a major client of Genesis, Three Arrows Capital (#3AC ), defaulted on a loan worth $2.4 billion, causing at least $1 billion in losses for Genesis.

However, DCG and Genesis still deliberately created a misleading impression that the company's business operations were not under threat.

  • Genesis posted on social media that their balance sheet is 'still strong,' despite the contrary reality.

  • Michael Moro, former CEO of Genesis, also claimed that the company had 'eliminated risk' from 3AC, which the SEC confirmed was false.

Penalties and Commitments from DCG

  • DCG agrees to pay $38 million without admitting or denying the allegations.

  • Michael Moro will also pay $500,000 due to his role in the case.

A spokesperson for DCG stated that the company has passed a lengthy investigation and is focusing on new development initiatives.

The Lesson of Transparency in Crypto

This case serves as a stern warning about the responsibilities of crypto companies to investors. In the context of an evolving cryptocurrency market, transparency and accountability are vital to regain public trust.

Is this a sign of further tightening from the SEC against this industry? Let's follow up!#anhbacong