The U.S. Securities and Exchange Commission has accused Digital Currency Group (DCG) and a previous executive of Genesis, Soichoro “Michael” Moro, of deceiving investors regarding Genesis’s financial status following the bankruptcy of Three Arrows Capital (3AC).
As per the filing dated January 17th, it’s stated that both DCG and Moro will collectively pay a total of $38.5 million in civil penalties. Specifically, DCG owes $38 million, while Moro is responsible for $500,000.
According to the filing made on January 17th, it’s been decided that DCG and Moro will together pay a fine of $38.5 million in a civil settlement. This includes an amount of $38 million owed by DCG and $500,000 by Moro.
Moro and DCG opted for the specified fines, maintaining neither guilt nor innocence with respect to any infractions under the Securities Act of 1933.
As an analyst, I’m reporting that this recent agreement marks another step in the ongoing legal journey of Genesis, a company that sought Chapter 11 bankruptcy protection in January 2023, primarily as a result of a 2022 loan default by Three Arrows Capital – a previous lender to Genesis.
The collapse of 3AC and its effect on Genesis
The fall of 3AC (Three Arrows Capital) created ripples throughout the cryptocurrency sector, impacting any companies within the industry that had connections with the collapsed crypto hedge fund.
In May 2022, just prior to the fall of the Terra system, Three Arrows Capital acquired approximately 10.9 million LUNA tokens that were locked up, costing them around $570 million.
By the year 2024, the initial $570 million investment had dropped dramatically, leaving it valued at just $670 – a significant blow to any company’s financial standing and their capacity to repay their debts.
3AC (Three Arrows Capital) could not fulfill their margin obligations by June 16, 2022, leading lenders to demand repayment. As a result, they were compelled to sell off some of their investments to cover their debts.
A few days past, on June 27th, a court in the British Virgin Islands mandated that 3AC should sell off their possessions.
On the very same day, Voyager Digital, the ex-brokerage firm, declared default against 3AC due to non-repayment of a 15,250 Bitcoin (BTC) loan. That’s when the liquidation order was issued.
After the bankruptcy of 3AC, the previous CEO of Genesis, Moro, has been working diligently with Digital Currency Group to minimize the financial losses suffered due to their involvement with 3AC.
Previously, in June, we mentioned that we managed to reduce our losses when a significant partner didn’t fulfill their margin requirement,” the ex-CEO explained in a July 2022 social media post.
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2025-01-17 23:46