Digital Currency Group, owner of Grayscale, will pay a $38 million fine to the SEC

THE Digital Currency Group (DCG) will pay a $38 million fine to the SEC. The agreement concerns its subsidiary Genesisthat promised returns in cryptocurrencies to its investors, but declared bankrupt in early 2023.

In addition to Genesis, DCG also controls Grayscalemanager of the third largest Bitcoin ETF in the world, and owner of the Coin Bureau before the site was sold to Bullish.

Also this week the Jack Dorsey’s company Block paid an $80 million fine to the US. According to the lawsuit, the company failed to maintain an anti-money laundering program and violated banking laws.

DCG Enters into $38 Million Settlement with SEC

While many link Genesis’ bankruptcy to FTX’s failure, the SEC points out that the Digital Currency Group subsidiary was already insolvent in June 2022, months before the cryptocurrency market saw a domino effect of companies going bankrupt.

“In mid-June 2022, a major borrower failed to meet a margin call, jeopardizing GGC’s business [Genesis Global Capital].”

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“However, Digital Currency Group negligently downplayed the impact of this bankruptcy and exaggerated its actions to assist GGC in the aftermath. In short, DCG’s lack of reasonable care gave the public a misleading impression about GGC’s financial health.”writes the SEC.

On that date, other giants such as Gemini, a broker for the Facebook twins, were also affected, as they had to pause withdrawals from their ‘Earn’ program. On the date, brothers Cameron and Tyler Winklevoss even accused DCG of being fraudsters.

According to the text, the DCG has 14 days to pay the $38 million fineto be turned over to the SEC and then to the U.S. Treasury Department.

The market is recovering from its old fiascos

While the end of 2022 and the beginning of 2023 were marked by bankruptcies of giants such as FTX, Genesis and many others, the years 2024 and 2025 are the opposite of this.

In addition to these companies and their founders paying what they owe, the entry of other giants such as BlackRock and Fidelity also marks a new phase in the market. Another point is the change in the US government, which tends to be more favorable to the sector.

However, it is necessary to keep a close eye on this new policy. After all, with a freer sector it is possible that people and companies with bad intentions can take advantage of this and create a new crisis of confidence in the sector.

Source: Live Coins

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