Former Genesis CEO Michael Moro Sanctioned by SEC Amid $38 Million Settlement

Digital Currency Group (DCG), a leading crypto-focused investment conglomerate, has reached a $38 million settlement agreement with the U.S. Securities and Exchange Commission (SEC) over allegations of misleading investors about risks tied to the now-defunct hedge fund Three Arrows Capital.

Allegations and Settlement Details

Court documents filed on January 17 alleged that DCG, through its crypto lending subsidiary Genesis Global Capital, LLC (GGC), colluded on a $1.1 billion promissory note to artificially inflate the lender’s balance sheet. Genesis investors were unaware of the note in 2022, which the SEC claimed violated federal regulations.

Executing the Note to create positive equity on the balance sheet without disclosing the terms of the Note to GGC investors allowed Digital Currency Group and GGC to obfuscate how and whether Digital Currency Group had stepped in to fix the problems caused by the TAC default.

Consequences for Former Genesis CEO Michael Moro

Former Genesis CEO Michael Moro agreed to pay $500,000 in civil penalties to settle the charges. Defendants were also ordered to cease and desist from further violations of federal rules.

Genesis Bankruptcy and Industry Fallout

Genesis filed for bankruptcy in 2023, disclosing up to $10 billion in liabilities and over 100,000 creditors. Top creditors like Gemini and VanEck were owed a combined $3 billion, according to court filings. Regulators have been pursuing DCG and its affiliates since 2023 due to widespread industry failures in 2022.

Regulatory Action and Ongoing Investigations

New York’s Attorney General has accused DCG, Genesis, and crypto exchange Gemini of defrauding 29,000 investors of $1 billion through Gemini’s Earn Program. Genesis had previously agreed to a $21 million SEC settlement in the Gemini Earn lawsuit.

Key Takeaways and Tips for Investors

Investors should be aware of the following:

  • Transparency is key: Ensure that you have a clear understanding of the terms and conditions of any investment, including any potential risks or liabilities.
  • Regulatory action can have significant consequences: The SEC’s settlement with DCG highlights the importance of complying with federal regulations to avoid costly penalties and reputational damage.
  • Stay informed: Keep up-to-date with the latest news and developments in the crypto industry to make informed investment decisions.

For more news and updates on the crypto industry, visit Global Crypto News.

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