The investment conglomerate Digital Currency Group (DCG), led by Barry Silbert, was accused by the United States Securities and Exchange Commission (SEC) of misleading investors, and sentenced to pay a fine of USD 38 million.
As announced in a presentation made by the SEC this January 17, the firm agreed to make the payment within the next 14 days as part of a conciliation agreement with the regulator.
The SEC stated, in an indictment, that has a history from 2023that the venture capital giant “negligently engaged in conduct that misled investors” with a loan program offered by a unit run by Genesis Global Capital (GGC).
He further points out that DCG generated income after mixing its assets, using investors’ resources to make institutional loans.
He notes that after a major borrower – cryptocurrency hedge fund Three Arrows Capital – defaulted on a margin call, DCG minimized the seriousness of the incident.
According to the SEC, Three Arrows Capital, that was bankrupthad outstanding loans from Genesis worth $2.4 billion, and DCG knew Genesis was going to lose at least 1 billion of dollars due to the collapse of the fund.
Still, “Genesis and DCG continued to act as if their business was not threatened by the measures, even though that was not true.”
In this way, the federal agency considers that Digital Currency Group “negligently engaged in conduct that misleadingly minimized the impact of that breach and exaggerated what they did to help DCG afterwards.”
They add that “Digital Currency Group’s lack of reasonable care created a materially false impression to the public about the financial health of DCG.”
As reported by CriptoNoticias, Génesis ended up declaring bankruptcy in early 2023 after failing to comply with reimbursement requests.
As far as is known, DCG accepted the payment of the fine, but without admitting or denying the accusations, while the former CEO of Genesis, Michael Moro, agreed to pay the SEC USD 500,000.
It should be added that, with this payment agreement, the SEC managed by Gary Gensler maintains aggressive attitude towards cryptocurrency companies which it has maintained in the last 4 years. He is even advancing his lawsuit against Ripple. There are two days left until Donald Trump assumes the US presidency and for the official to finish his term.