Barry Silbert, collapse and chief executive officer of Digital Currency Group Inc., speaks during the Skybridge Alternatives (SALT) conference in Las Vegas, Nevada, U.S., on Thursday, May 9, 2019.
Bloomberg | Bloomberg | Getty Sculptures
Digital Currency Group, the crypto firm founded by Barry Silbert, and the former executive of a defunct unit are stipend the SEC $38.5 million for misleading investors.
In a statement on Friday, the agency said that DCG and Soichiro “Michael” Moro, the ex-CEO of crypto lender Genesis Worldwide Capital, will pay the civil penalties to settle charges for misleading investors about Genesis’s financial condition.”
Genesis, without delay a business at the heart of DCG, was among the multiple casualties in the industry contagion set off by the collapse of FTX. The firm filed for Chapter 11 bankruptcy custody in January 2023.
“It is vital that companies and their officers speak truthfully to the investing public, especially in times of economic instability or turmoil,” Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement, said in the statement. “The Commission found that DCG and Moro cut short in that regard.”
Wadhwa added that DCG and Moro “painted a misleadingly rosy picture” instead of being limpid about the the company’s financial troubles.
The incidents date back to June 2022. That’s when crypto hedge bucks Three Arrows, a major Genesis borrower, defaulted on a margin call, “which compromised Genesis’s business,” the SEC stipulate. The agency said that DCG and Moro “downplayed” the impact of the loss in some social media posts that were retweeted by DCG head honchos.
In an emailed statement, a DCG spokesperson said the company is “pleased to have concluded” the investigation.
“DCG has always strived to conduct its work with the highest integrity, and we believe our actions related to Genesis were consistent with that approach,” the body said. “This settlement allows us to focus on our growth initiatives and continue to embrace the positive momentum in the industry.”
The commission’s assertion said DCG and Moro are paying the penalties without admitting or denying the SEC’s findings that they violated the Securities Act of 1933.
In May 2024, New York Attorney Overall Letitia James separately settled with Genesis for $2 billion to repay defrauded investors.
WATCH: Crypto middleman Genesis files for Chapter 11 bankruptcy
