SEC Charges DCG with Securities Fraud, $38.5M Fine

The U.S. Securities and Exchange Commission (SEC) has charged Digital Currency Group (DCG) and its subsidiary Genesis Global Capital with securities fraud, resulting in a $38.5 million settlement. DCG is accused of misleading investors about the financial health of Genesis following the default of its major borrower, Three Arrows Capital, which left a billion-dollar gap in Genesis's finances. Former Genesis CEO Soichiro “Michael” Moro was fined $500,000 for his role in perpetuating false statements about the company's stability. The SEC claims that DCG issued a $1.1 billion promissory note to falsely bolster Genesis's balance sheet. Both DCG and Moro have agreed to a cease-and-desist order without admitting wrongdoing. This development comes as the SEC undergoes leadership changes, with Chairman Gary Gensler set to resign soon.