The U.S. Securities & Exchange Commission issued settled charges against Digital Currency Group Inc. (DCG) and Soichiro “Michael” Moro, the former CEO of DCG’s now-defunct subsidiary Genesis Global Capital LLC, for misleading investors about Genesis’s financial condition. The settlement includes USD 38.5 million in civil penalties and cease-and-desist orders. The SEC found that after Three Arrows Capital defaulted on a margin call in mid-June 2022, compromising Genesis’s business, DCG and Moro downplayed the impact of an approximately USD 1 billion loss and overstated what DCG did to support Genesis. The order cites false or misleading statements posted by Moro on Twitter in the days following the default, including characterising Genesis’s balance sheet as strong and claiming Genesis had shed the risk from the default; DCG executives retweeted certain statements. It also points to a tweet after DCG and Genesis entered a 10-year promissory note, in which Moro stated DCG had ensured Genesis had “adequate capital to operate” despite no capital having been transferred. Without admitting or denying the SEC’s findings that they violated Section 17(a)(3) of the Securities Act of 1933, DCG agreed to pay a USD 38 million penalty and Moro agreed to pay USD 500,000.

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