DCG agrees to settle with SEC for $38 million fine

PANews reported on January 18 that according to Decrypt, Digital Currency Group (DCG) will pay US$38 million to settle lending fraud charges brought by the US SEC against its subsidiary Genesis Global Capital. The securities regulator accused the company of negligence and misleading investors about the health of its insolvency unit. DCG settled the charges, neither admitting nor denying them.

According to documents filed with the U.S. Securities and Exchange Commission: “In mid-June 2022, a large borrower failed to make a margin payment on time, which harmed GGC’s business. However, the Digital Currency Group was negligent and took misleading actions to downplay the In short, Digital Currency Group failed to take reasonable precautions and gave the public a materially false impression about GGC's financial condition. "

The “big borrower” in question is Three Arrows Capital, a once-prominent crypto hedge fund that went bankrupt in 2022 amid the collapse of the Terra crypto ecosystem. According to SEC filings, bankrupt Three Arrows Capital had $2.4 billion in outstanding loans to Genesis, and DCG knew Genesis would lose at least $1 billion from the fund's collapse. Nonetheless, the SEC said Genesis and DCG continued to act as if their businesses were not threatened by these moves, even though that was not the case.