Digital Currency Group (DCG), a prominent player in the cryptocurrency industry, on Friday agreed to settle with the U.S. Securities and Exchange Commission (SEC) for misleading investors.
What Happened: DCG, founded by Barry Silbert, and its former executive, Soichiro “Michael” Moro, will collectively pay $38.5 million to the SEC. This settlement is to resolve charges of providing false information about the financial state of Genesis Global Capital, a crypto lending unit once under DCG.
The SEC found that DCG and Moro misrepresented Genesis’s financial condition during a period of instability caused by the collapse of FTX in 2022. This included downplaying the impact of a major Genesis borrower’s default on the company’s business.
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The SEC noted that DCG and Moro agreed to pay the penalties without admitting or denying the allegations of violating the Securities Act of 1933. This settlement comes after a separate agreement in May 2024, in which New York Attorney General Letitia James reached a $2 billion settlement with Genesis to compensate defrauded investors.
Why It Matters: The cryptocurrency industry has been under increased scrutiny from regulatory bodies. This settlement comes in the wake of similar actions taken against other financial firms.
Earlier this month, Robinhood agreed to pay $45 million to the SEC for a series of regulatory violations. The charges were related to failures in trading activity reporting, cybersecurity practices, recordkeeping, and customer communication.
Additionally, a group of financial firms, including Blackstone and KKR, settled with the SEC for $63.1 million over recordkeeping violations. These firms were accused of using unauthorized communication methods to exchange messages that were required to be preserved under securities laws.
Meanwhile, Elon Musk criticized the SEC for focusing on trivial cases and ignoring more significant crimes. This came after the SEC sued Musk for allegedly failing to disclose a substantial stake in X (formerly known as Twitter) before his acquisition of the platform.
Price Action: At the time of writing, Bitcoin (CRYPTO: BTC) was exchanging hands at $103,660.11, up 2% in the last 24 hours, according to data from Benzinga Pro. During the same period, Ethereum (CRYPTO: ETH) lost 0.46%, Dogecoin (CRYPTO: DOGE) shed 1.39% and Litecoin (CRYPTO: LTC) was down 8.29%.
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