Digital Currency Group agrees to pay $38 million to settle with SEC over negligence

Global investment firm Digital Currency Group agreed to settle and pay $38 million to the U.S. Securities and Exchange Commission on Friday over allegations that it misled investors via crypto lender Genesis Global Capital, LLC. 

The SEC said that one of Genesis' largest borrowers was asset hedge fund Three Arrows Capital and said on June 13 that the fund "failed to meet a margin call."

"In mid-June 2022, a large borrower defaulted on a margin call, which compromised GGC’s business," the SEC said in a filing on Friday. "Yet, Digital Currency Group negligently engaged in conduct that misleadingly downplayed the impact of that default and overstated what Digital Currency Group did to help GGC in the aftermath."

Former Genesis CEO Soichiro "Michael" Moro also agreed to settle with SEC and pay $500,000 over charges involving negligence. 

DCG has been in the crosshairs of regulators for years. The New York State Attorney General The NYAG sued crypto exchange Gemini, crypto lender Genesis and its parent company DCG in October over the Gemini crypto lending program. At the time, James said the three entities defrauded more than 29,000 New Yorkers of more than $1 billion. James also said DCG and Genesis "disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment."

Genesis filed for bankruptcy in 2023 and completed its bankruptcy restructuring in August 2024. When filing for bankruptcy, Genesis disclosed it had over 100,000 creditors and had as much as $10 billion in liabilities. It owed approximately $3 billion to its top 50 creditors, including Gemini, asset manager VanEck and trading firm Cumberland.