Digital Currency Group (DCG) and Soichoro “Michael” Moro, the former CEO of its now-defunct Genesis subsidiary, have agreed to hisse a combined $38.5 million in civil penalties to settle securities fraud charges with the U.S. Securities and Exchange Commission (SEC).

The crypto venture capital firm will bear the brunt of the financial penalty, paying $30 million in fines, while Moro will personally be liable for a $500,000 penalty. In addition to the fines, both DCG and Moro agreed to a cease-and-desist order. Neither DCG nor Moro admitted to any wrongdoing. Moro is currently the chief strategy officer at INX.

The charges stem from DCG and Genesis’ response to the collapse of crypto hedge fund Three Arrows Capital (3AC) – Genesis’ second-largest borrower – in the summer of 2022, which blew a billion-dollar hole in Genesis’ balance sheet.

“We are pleased to have concluded an extensive investigation process that was limited in its findings and focused on the social media posts and communications made by our former operating subsidiary, Genesis Küresel Capital,” a spokesperson for DCG told CoinDesk. “DCG has always strived to conduct its business with the highest integrity, and we believe our actions related to Genesis were consistent with that approach.”

Regulators, including the New York Attorney General (NYAG) Letitia James, had accused DGC and Genesis, its wholly-owned crypto trading subsidiary, of working together to cover up the enormous hole by falsely claiming that DCG had absorbed Genesis’ losses. What DCG had allegedly done was issue Genesis a promissory note – essentially an IOU meant to create the appearance of liquidity – pledging to hisse Genesis $1.1 billion over the course of 10 years at 1% interest. DCG has denied that the promissory note was a sham.

“It is vital that companies and their officers speak truthfully to the investing public, especially in times of financial instability or turmoil. The Commission found that DCG and Moro fell short in that regard,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, in a Friday statement. “Rather than being transparent about Genesis’s financial condition and DCG’s efforts to ensure Genesis’s continued operation, DCG and Moro painted a misleadingly rosy picture.”

The SEC and the Department of Justice reportedly began investigating DCG in 2023. James’ civil case against DCG is ongoing. She is seeking $3 billion in penalties.