The U.S. Securities and Exchange Commission (SEC) has sanctioned former Genesis CEO Michael Moro in a case against its parent company, Digital Currency Group, for misleading investors about risks involving hedge fund Three Arrows Capital.
Current SEC Conflict Status
Digital Currency Group has agreed to a $38 million settlement with the SEC for misleading investors through its subsidiary, Genesis Global Capital. The SEC claims that DCG and Genesis Global Capital colluded on a $1.1 billion promissory note to artificially inflate the company's balance sheet.
Details of Allegations and Consequences
According to court documents, DCG and Genesis did not disclose the promissory note to investors, violating federal regulations. Former Genesis CEO Michael Moro has agreed to pay $500,000 in civil penalties to settle the charges and cease any further violations of federal rules.
Context and Prior Incidents
Genesis filed for bankruptcy in 2023, disclosing up to $10 billion in liabilities and over 100,000 creditors. Major creditors like Gemini and VanEck were owed a combined $3 billion. Previously, New York's Attorney General accused DCG, Genesis, and exchange Gemini of defrauding 29,000 investors.
The situation surrounding Digital Currency Group and its subsidiaries continues to evolve, as regulators closely examine their actions following past industry failures.
