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Former Genesis CEO Michael Moro has been sanctioned by the US Securities and Exchange Commission as part of a 2023 lawsuit against its parent company, Digital Currency Group.
Digital Currency Group, a cryptocurrency-focused investment conglomerate, has reached a $38 million settlement agreement with the SEC for misleading investors about risks linked to the now-defunct Three Arrows Capital hedge fund.
Court documents filed on Friday, January 17 plead that DCG misled investors through Genesis Global Capital, LLC, its crypto lending subsidiary.
The SEC claimed that GGC and DCG colluded on a $1.1 billion note to artificially inflate the lender's balance sheet. Genesis investors were unaware of the note in 2022, which the SEC said 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 intervened to address the issues caused by the default. of CT.
Judicial filing before the SEC
Former Genesis CEO Michael Moro agreed to pay $500,000 in civil penalties to resolve the charges. The defendants were also ordered to cease and desist from committing further violations of federal regulations.
Genesis filed for bankruptcy in 2023, revealing up to $10 billion in liabilities and more than 100,000 creditors. Major creditors like Gemini and VanEck were owed a combined total of $3 billion, according to court documents.
Regulators have been pursuing DCG and its affiliates since 2023 due to widespread industry failures in 2022. The New York Attorney General accused DCG, Genesis and the Gemini crypto exchange of defrauding 29,000 investors out of $1 billion through the Gemini Earn program. Genesis had previously agreed to a $21 million SEC settlement in the Gemini Earn lawsuit.
