In re DIGITAL CURRENCY

   
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11357 / January 17, 2025 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22427 
  
 
In the Matter of 
 
DIGITAL CURRENCY 
GROUP, INC.  
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”) against Digital Currency Group, Inc. (“Respondent” or “Digital 
Currency Group”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 
admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings, 
Pursuant to Section 8A of the Securities Act of 1933, Making Findings and a Imposing Cease-and-
Desist Order (“Order”), as set forth below. 
 
 
  

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:   
 
Summary 
 
 In June and July of 2022, Digital Currency Group negligently engaged in conduct that 
misled investors in a lending program offered and sold to retail investors by one of its subsidiaries, 
Genesis Global Capital, LLC (“GGC”).  GGC offered investors yield in return for the investors 
tendering bitcoin or other crypto assets to GGC.  GGC comingled investors’ assets and typically 
lent those assets out to institutional borrowers—generating revenue by charging interest to those 
borrowers.  In mid-June 2022, a large borrower defaulted on a margin call, which compromised 
GGC’s business.  Yet, Digital Currency Group negligently engaged in conduct that misleadingly 
downplayed the impact of that default and overstated what Digital Currency Group did to help GGC 
in the aftermath.  In short, Digital Currency Group’s failure to exercise reasonable care created a 
materially false impression to the public regarding GGC’s financial health.   
 
 In November 2022, faced with a wave of redemption requests that it could not satisfy, GGC 
suspended withdrawals.  It filed for bankruptcy in January 2023. 
 
Respondent 
 
 1. Digital Currency Group was founded in 2015 and is incorporated in Delaware, with 
its principal place of business in Stamford, Connecticut.  Digital Currency Group has never been 
registered with the Commission in any capacity, nor has Digital Currency Group registered any 
securities with the Commission. 
 
Other Relevant Entities 
 
 2. GGC, at all relevant times, was a Delaware limited liability company formed in 
2017 and a wholly owned subsidiary of Genesis Global Holdco, LLC, which is wholly owned by 
Digital Currency Group.  GGC has never been registered with the Commission in any capacity, nor 
had it registered any securities with the Commission.
 
 
Facts 
 
3. From 2021 to 2022, GGC offered a crypto asset lending program to retail investors.  
GGC was in the business of lending crypto assets and U.S. dollars to institutional borrowers, such 
as crypto-focused hedge funds.  The capital to run this business came, in part, from retail investors 
who tendered crypto assets to GGC in return for interest payments.  GGC commingled the tendered 
crypto assets and lent them out to the institutional borrowers to generate revenue.    
 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 
 

 3 
 
4. One of GGC’s largest borrowers was the crypto asset hedge fund, Three Arrows 
Capital (“TAC”).  As of early June 2022, TAC had outstanding loans from GGC that totaled 
approximately $2.4 billion.  On June 13, 2022, TAC failed to meet a margin call and ultimately 
defaulted on these loans, leaving GGC only with collateral—mostly in the form of bitcoin or assets 
tied to the price of bitcoin.  While the value of this collateral was fluctuating, Digital Currency 
Group was informed by GGC almost immediately that the value of the collateral fell far short of 
the $2.4 billion face value of the TAC loan.  On June 13, 2022—the day of the default—this 
shortfall was at least $500 million.  In the days that followed, the price of bitcoin—and, 
correspondingly, the value of the collateral—declined, causing GGC’s exposure to grow.  On June 
15, GGC’s estimated “mark to market deficit” on the TAC loan was over $800 million.  And on 
June 16, it had reached $1 billion.  GGC updated Digital Currency Group executives daily in the 
second half of June concerning any discussions with TAC to cure the default as well as the “mark 
to market” unsecured exposure GGC had with respect to the collateral it held.     
 
5. Without additional capital to replace the $1 billion it had lost, GGC’s viability as a 
business was at risk.  First, as a result of the unsecured exposure, if too many GGC investors 
demanded their money or crypto assets back, GGC would not be able to pay them.  Second, GGC 
had one billion fewer dollars on which to earn interest.  Digital Currency Group understood GGC’s 
revenue model and the risks accompanying a rush of investor demands for repayment of their 
loans. 
 
6. Despite GGC’s compromised financial condition in the second half of June, Digital 
Currency Group executives made clear to Digital Currency Group and GGC personnel that they 
needed to project strength.   
 
7. On June 15, 2022, GGC tweeted that its balance sheet was strong.  Digital Currency 
Group’s executives retweeted this message.  The tweet was materially false or misleading because 
it failed to take into account the unsecured exposure on the TAC loan. Indeed, given the size of the 
unsecured exposure at the time, GGC’s balance sheet was not strong.  Then, on June 17, 2022, 
GGC’s CEO tweeted that GGC had “shed the risk” associated with the TAC default.  This tweet 
was also materially false or misleading because GGC remained exposed to movements in the value 
of the collateral associated with the TAC loan.  Digital Currency Group reviewed these tweets but 
failed to exercise reasonable care in connection with their publication by GGC.  
 
8. Giving more urgency to the situation: GGC was required to provide a balance sheet 
to certain counterparties as of June 30, 2022.  Digital Currency Group and GGC understood that if 
that balance sheet were to show negative equity—i.e., liabilities greater than assets—there would 
likely be a “run on the bank” that GGC likely would not survive. 
 
9. More fundamentally, GGC needed additional capital—both to protect against a 
potential influx in redemption requests and to generate profit again as a business.  Digital Currency 
Group understood this.     
 

 4 
10. On June 30, Digital Currency Group executed a $1.1 billion promissory note (the 
“Note”).  The Note created a $1.1 billion obligation from Digital Currency Group to GGC, but 
required no payments—other than any recoveries in the TAC liquidation proceeding—until 2032.  
Specifically, the Note had a 10-year term, accrued interest at 1%, and was non-callable.  GGC 
recorded the Note on its balance sheet as a $1.1 billion asset.  Importantly, this allowed it to show 
positive equity on its June 30th balance sheet when it otherwise would have shown negative 
equity.  Through the summer of 2022, however, the terms of the Note were not disclosed to GGC’s 
investors. 
 
11. Executing the Note to create positive equity on the balance sheet without disclosing 
the terms of the Note to GGC investors allowed Digital Currency Group and GGC to obfuscate 
how and whether Digital Currency Group had stepped in to fix the problems caused by the TAC 
default.  For example, in early July, GGC personnel—with the knowledge and participation of 
Digital Currency Group personnel—drafted a tweet, posted on July 6, stating that Digital Currency 
Group had “assumed certain liabilities of GGC related to [TAC] to ensure [GGC has] adequate 
capital to operate and scale our business for the long-term.”  This was false or misleading.  Digital 
Currency Group had not transferred any capital to GGC.  While the Note may have technically 
created positive equity on the GGC balance sheet, it had not improved GGC’s financial stability.  
Digital Currency Group failed to exercise reasonable care in connection with GGC’s publication of 
this tweet and was negligent in not ensuring that the detailed terms of the Note were disclosed by 
GGC to GGC’s investors. 
 
Violation 
 
12. As a result of the conduct described above, Digital Currency Group violated 
Section 17(a)(3) of the Securities Act, which prohibits conduct in the offer or sale of securities that 
operates or would operate as a fraud or deceit upon the purchaser.  Claims under Section 17(a)(3) 
of the Securities Act do not require a showing of scienter; instead, a showing of negligence is 
sufficient. Aaron v. SEC, 446 U.S. 680, 696-97 (1980). 
 
13. As described above, by encouraging and perpetuating a narrative that GGC was in a 
strong financial position after the TAC default and by not ensuring the Note was accurately 
described, Digital Currency Group at least negligently engaged in materially false public 
messaging regarding GGC’s financial condition. 
 
 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent Digital Currency Group’s Offer. 
 
 Accordingly, it is hereby ORDERED that:  
 
 A. Pursuant to Section 8A of the Securities Act, Respondent Digital Currency Group 
cease and desist from committing or causing any violations and any future violations of Section 
17(a)(3) of the Securities Act. 

 5 
 
B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $38,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
 
C. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
D. Payments by check or money order must be accompanied by a cover letter 
identifying Digital Currency Group, Inc. as a Respondent in these proceedings, and the file number 
of these proceedings; a copy of the cover letter and check or money order must be sent to Mark R. 
Sylvester, Division of Enforcement, Securities and Exchange Commission, 100 Pearl Street, Suite 
20-100, New York, N.Y.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 

 6 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
        Secretary 
 
 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11357 / January 17, 2025 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22427 

  

 

In the Matter of 

 

DIGITAL CURRENCY 

GROUP, INC.  

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST ORDER  

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) against Digital Currency Group, Inc. (“Respondent” or “Digital 

Currency Group”). 

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 

admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings, 

Pursuant to Section 8A of the Securities Act of 1933, Making Findings and a Imposing Cease-and-

Desist Order (“Order”), as set forth below. 

 

 

  



 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:   

 

Summary 

 

 In June and July of 2022, Digital Currency Group negligently engaged in conduct that 

misled investors in a lending program offered and sold to retail investors by one of its subsidiaries, 

Genesis Global Capital, LLC (“GGC”).  GGC offered investors yield in return for the investors 

tendering bitcoin or other crypto assets to GGC.  GGC comingled investors’ assets and typically 

lent those assets out to institutional borrowers—generating revenue by charging interest to those 

borrowers.  In mid-June 2022, a large borrower defaulted on a margin call, which compromised 

GGC’s business.  Yet, Digital Currency Group negligently engaged in conduct that misleadingly 

downplayed the impact of that default and overstated what Digital Currency Group did to help GGC 

in the aftermath.  In short, Digital Currency Group’s failure to exercise reasonable care created a 

materially false impression to the public regarding GGC’s financial health.   

 

 In November 2022, faced with a wave of redemption requests that it could not satisfy, GGC 

suspended withdrawals.  It filed for bankruptcy in January 2023. 

 

Respondent 

 

 1. Digital Currency Group was founded in 2015 and is incorporated in Delaware, with 

its principal place of business in Stamford, Connecticut.  Digital Currency Group has never been 

registered with the Commission in any capacity, nor has Digital Currency Group registered any 

securities with the Commission. 

 

Other Relevant Entities 

 

 2. GGC, at all relevant times, was a Delaware limited liability company formed in 

2017 and a wholly owned subsidiary of Genesis Global Holdco, LLC, which is wholly owned by 

Digital Currency Group.  GGC has never been registered with the Commission in any capacity, nor 

had it registered any securities with the Commission. 

 

Facts 

 

3. From 2021 to 2022, GGC offered a crypto asset lending program to retail investors.  

GGC was in the business of lending crypto assets and U.S. dollars to institutional borrowers, such 

as crypto-focused hedge funds.  The capital to run this business came, in part, from retail investors 

who tendered crypto assets to GGC in return for interest payments.  GGC commingled the tendered 

crypto assets and lent them out to the institutional borrowers to generate revenue.    

 
1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 

 



 3 

 

4. One of GGC’s largest borrowers was the crypto asset hedge fund, Three Arrows 

Capital (“TAC”).  As of early June 2022, TAC had outstanding loans from GGC that totaled 

approximately $2.4 billion.  On June 13, 2022, TAC failed to meet a margin call and ultimately 

defaulted on these loans, leaving GGC only with collateral—mostly in the form of bitcoin or assets 

tied to the price of bitcoin.  While the value of this collateral was fluctuating, Digital Currency 

Group was informed by GGC almost immediately that the value of the collateral fell far short of 

the $2.4 billion face value of the TAC loan.  On June 13, 2022—the day of the default—this 

shortfall was at least $500 million.  In the days that followed, the price of bitcoin—and, 

correspondingly, the value of the collateral—declined, causing GGC’s exposure to grow.  On June 

15, GGC’s estimated “mark to market deficit” on the TAC loan was over $800 million.  And on 

June 16, it had reached $1 billion.  GGC updated Digital Currency Group executives daily in the 

second half of June concerning any discussions with TAC to cure the default as well as the “mark 

to market” unsecured exposure GGC had with respect to the collateral it held.     

 

5. Without additional capital to replace the $1 billion it had lost, GGC’s viability as a 

business was at risk.  First, as a result of the unsecured exposure, if too many GGC investors 

demanded their money or crypto assets back, GGC would not be able to pay them.  Second, GGC 

had one billion fewer dollars on which to earn interest.  Digital Currency Group understood GGC’s 

revenue model and the risks accompanying a rush of investor demands for repayment of their 

loans. 

 

6. Despite GGC’s compromised financial condition in the second half of June, Digital 

Currency Group executives made clear to Digital Currency Group and GGC personnel that they 

needed to project strength.   

 

7. On June 15, 2022, GGC tweeted that its balance sheet was strong.  Digital Currency 

Group’s executives retweeted this message.  The tweet was materially false or misleading because 

it failed to take into account the unsecured exposure on the TAC loan. Indeed, given the size of the 

unsecured exposure at the time, GGC’s balance sheet was not strong.  Then, on June 17, 2022, 

GGC’s CEO tweeted that GGC had “shed the risk” associated with the TAC default.  This tweet 

was also materially false or misleading because GGC remained exposed to movements in the value 

of the collateral associated with the TAC loan.  Digital Currency Group reviewed these tweets but 

failed to exercise reasonable care in connection with their publication by GGC.  

 

8. Giving more urgency to the situation: GGC was required to provide a balance sheet 

to certain counterparties as of June 30, 2022.  Digital Currency Group and GGC understood that if 

that balance sheet were to show negative equity—i.e., liabilities greater than assets—there would 

likely be a “run on the bank” that GGC likely would not survive. 

 

9. More fundamentally, GGC needed additional capital—both to protect against a 

potential influx in redemption requests and to generate profit again as a business.  Digital Currency 

Group understood this.     

 



 4 

10. On June 30, Digital Currency Group executed a $1.1 billion promissory note (the 

“Note”).  The Note created a $1.1 billion obligation from Digital Currency Group to GGC, but 

required no payments—other than any recoveries in the TAC liquidation proceeding—until 2032.  

Specifically, the Note had a 10-year term, accrued interest at 1%, and was non-callable.  GGC 

recorded the Note on its balance sheet as a $1.1 billion asset.  Importantly, this allowed it to show 

positive equity on its June 30th balance sheet when it otherwise would have shown negative 

equity.  Through the summer of 2022, however, the terms of the Note were not disclosed to GGC’s 

investors. 

 

11. Executing the Note to create positive equity on the balance sheet without disclosing 

the terms of the Note to GGC investors allowed Digital Currency Group and GGC to obfuscate 

how and whether Digital Currency Group had stepped in to fix the problems caused by the TAC 

default.  For example, in early July, GGC personnel—with the knowledge and participation of 

Digital Currency Group personnel—drafted a tweet, posted on July 6, stating that Digital Currency 

Group had “assumed certain liabilities of GGC related to [TAC] to ensure [GGC has] adequate 

capital to operate and scale our business for the long-term.”  This was false or misleading.  Digital 

Currency Group had not transferred any capital to GGC.  While the Note may have technically 

created positive equity on the GGC balance sheet, it had not improved GGC’s financial stability.  

Digital Currency Group failed to exercise reasonable care in connection with GGC’s publication of 

this tweet and was negligent in not ensuring that the detailed terms of the Note were disclosed by 

GGC to GGC’s investors. 

 

Violation 

 

12. As a result of the conduct described above, Digital Currency Group violated 

Section 17(a)(3) of the Securities Act, which prohibits conduct in the offer or sale of securities that 

operates or would operate as a fraud or deceit upon the purchaser.  Claims under Section 17(a)(3) 

of the Securities Act do not require a showing of scienter; instead, a showing of negligence is 

sufficient. Aaron v. SEC, 446 U.S. 680, 696-97 (1980). 

 

13. As described above, by encouraging and perpetuating a narrative that GGC was in a 

strong financial position after the TAC default and by not ensuring the Note was accurately 

described, Digital Currency Group at least negligently engaged in materially false public 

messaging regarding GGC’s financial condition. 

 

 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent Digital Currency Group’s Offer. 

 

 Accordingly, it is hereby ORDERED that:  

 

 A. Pursuant to Section 8A of the Securities Act, Respondent Digital Currency Group 

cease and desist from committing or causing any violations and any future violations of Section 

17(a)(3) of the Securities Act. 



 5 

 

B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $38,000,000 to the Securities and Exchange Commission for transfer to 

the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   

 

C. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

D. Payments by check or money order must be accompanied by a cover letter 

identifying Digital Currency Group, Inc. as a Respondent in these proceedings, and the file number 

of these proceedings; a copy of the cover letter and check or money order must be sent to Mark R. 

Sylvester, Division of Enforcement, Securities and Exchange Commission, 100 Pearl Street, Suite 

20-100, New York, N.Y.   

 

 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

http://www.sec.gov/about/offices/ofm.htm


 6 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

        Secretary