Cryptocurrency company DCG will pay $38.5 million to the Securities and Exchange Commission for misleading investors

Digital Currency Group, the cryptocurrency company founded by Barry Silbert, the former CEO of a defunct unit, is paying $38.5 million to the Securities and Exchange Commission for misleading investors.

In a statement on FridayDCG and Soichiro “Michael” Moro, the former CEO of cryptocurrency lender Genesis Global Capital, will pay civil fines to settle charges of misleading investors about Genesis’ financial status, the agency said.

Genesis, once a company at the heart of DCG, was among the many casualties of the industry contagion started by the FTX collapse. Company Filed for Chapter 11 bankruptcy Protection in January 2023.

“It is important that companies and their officers speak honestly to the investing public, especially in times of financial instability or turmoil,” Sanjay Wadhwa, acting director of the SEC’s Enforcement Division, said in the statement. “The Commission found that DCG and Moro failed in this regard.”

DCG and Moro “painted a misleadingly rosy picture” instead of being transparent about the company’s financial woes, Wadhwa added.

These incidents date back to June 2022. That’s when cryptocurrency hedge fund Three Arrows, a major borrower of Genesis, defaulted on a margin call, “harming Genesis’ business,” the SEC said. DCG and Moro “downplayed” the impact of the loss in some social media posts retweeted by DCG executives, the agency said.

In an emailed statement, a DCG spokesperson said the company was “pleased with the conclusion” of the investigation.

“DCG has always sought to conduct its business with the highest degree of integrity, and we believe our actions related to Genesis have been consistent with that approach,” the company said. “This settlement allows us to focus on our growth initiatives and continue to embrace the positive momentum in the industry.”

DCG and Moro are paying the fines without admitting or denying the SEC’s findings that they violated the Securities Act of 1933, the commission’s statement said.

In May 2024New York Attorney General Letitia James Settled separately With Genesis for $2 billion to repay defrauded investors.

He watches: Cryptocurrency broker Genesis files for Chapter 11 bankruptcy