United States of America: SEC issued cease-and-desist order to Digital Currency Group and former CEO of Genesis Global Capital for misleading investors

On 17 January 2025, the Securities and Exchange Commission (SEC) brought charges against Digital Currency Group (DCG) and Soichiro Moro, the former CEO of Genesis Global Capital, a now-defunct DCG subsidiary, for allegedly misleading investors about Genesis’s financial situation. The case relates to events in June 2022, when Genesis incurred significant losses of approximately USD 1 billion after Three Arrows Capital, one of its borrowers, defaulted on a margin call. DCG and Moro reportedly minimised the impact of the losses and overstated DCG's support for Genesis. Moro made public statements on Twitter, claiming Genesis maintained a strong balance sheet and had adequately addressed the risks from the default. These claims were shared by DCG executives on social media, despite being inaccurate. Moro also falsely suggested that a promissory note agreement between DCG and Genesis ensured the latter had sufficient capital, even though no funds were transferred under the arrangement. Without admitting or denying the SEC's findings, DCG and Moro have agreed to a cease-and-desist order and will pay civil penalties totalling USD 38.5 million. DCG will pay USD 38 million, while Moro will pay USD 500’000.