The U.S. Securities and Exchange Commission has sanctioned Michael Moro, the former CEO of Genesis, as part of the 2023 action against the company’s parent, Digital Currency Group. As part of the settlement, DCG, a large crypto-focused investment company, has agreed to pay $38 million.
The SEC filed a lawsuit against DCG for deceiving investors about the risks associated with the now-defunct hedge fund Three Arrows Capital. According to court filings dated January 17, DCG allegedly deceived investors through its cryptocurrency lending company, Genesis Global Capital, LLC.
Both companies allegedly conspired on a $1.1 billion promissory note to inflate the lender’s balance sheet. The 2022 note, which the SEC claimed broke federal regulations, was unknown to Genesis investors.
The settlement also includes penalties for Michael Moro, who has agreed to pay a $500,000 fine. The SEC has ordered Moro and DCG to stop engaging in activities violating federal securities laws.
Genesis filed for bankruptcy in 2023, revealing that it owed up to $10 billion and had over 100,000 creditors. Major creditors, such as Gemini and VanEck, were owed a combined $3 billion.
This case is part of broader regulatory scrutiny targeting DCG and its subsidiaries, stemming from widespread failures in the crypto industry in 2022.
Additionally, New York’s Attorney General has accused DCG, Genesis, and the Gemini exchange of defrauding thousands of investors through Gemini’s Earn Program, resulting in further legal battles. Genesis had previously agreed to a separate $21 million settlement related to the Gemini Earn issue.
