SEC Hits Crypto Group With $38 Million Fine: Report

The US Securities and Exchange Commission (SEC) has initiated legal proceedings against Digital Currency Group (DCG) and its subsidiary Genesis, accusing them of defrauding investors and violating securities laws.

The regulator ordered DCG to pay a $38 million civil penalty to prevent future violations and issued a cease and desist order. the allegations Focus on former Genesis CEO Soichiro “Michael”. They accuse him of using dishonest methods to present the financial viability of the cryptocurrency company.

Allegations of deceiving investors

In addition, second Examines whether DCG’s misleading financial disclosures and actions following the 2022 collapse of Three Arrows Capital (3AC), one of Genesis’ largest borrowers. Genesis took the money and incurred huge losses, defaulting on a $2.4 billion loan.

DCG executives deliberately ran a billion-dollar deficit even as they struggled to maintain a façade of financial stability. Described as “aggressive” on Genesis’ balance sheet and driving 3AC’s default risk, the effort included public statements and tweets.

The SEC case involves a $1.1 billion promissory note issued by DCG to Genesis. The SEC alleges that Genesis created an accounting asset but no actual transfer of capital occurred. In addition, investors remained unaware of the terms of the note. By completing this maneuver, Genesis could witness positive equity on June 30, 2022. However, little financial stability followed. In November 2022, Genesis suspended customer withdrawals, citing liquidity issues.

In January 2023, cryptocurrency company Genesis declared bankruptcy, resulting in retail clients and investors suffering significant losses. The SEC alleges that the company’s past conduct, including deceptive disclosures, contributed to the size of the fallout. As with any other industry that has seen such rapid growth, the cryptocurrency industry remains the focus of the SEC’s attention, and the regulatory body continues to advocate for transparency and accountability to protect investors passionately.

The SEC imposes sanctions on former Genesis CEO Michael Morrow

The US Securities and Exchange Commission (SEC) has imposed sanctions on former Genesis CEO Soichiro “Michael” Moro. The sanctions accuse him of deceptive public communications during the company’s financial turmoil.

According to an SEC filing, Morrow agreed to public statements and tweets that downplayed the company’s difficulties when the cryptocurrency hedge fund Three Arrows Capital (3AC) default. In particular, Moro was charged with supporting Genesis’ claims that it had “de-risked” 3AC’s default and “cashed out” and that its balance sheet was strong even with massive amounts of undisclosed financial exposure.

More repercussions for the company come as the regulator says these statements were made to misrepresent the seriousness of the company’s financial situation.