After FTX, USA Is Investigating This Cryptocurrency Company!

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US regulators seem to continue to focus on crypto companies. According to the latest developments, Digital Currency Group (DCG) is on the authorities’ radar. Here are the details…

US officials investigating the cryptocurrency company

Officials from the US Department of Justice’s Eastern District of New York (EDNY) and the US Securities and Exchange Commission are examining transfers between Digital Currency Group and the holding’s subsidiary, Genesis, Bloomberg reported late Friday. The report noted that prosecutors at the DOJ’s Eastern District office of New York have so far requested interviews and documents from DCG and Genesis, but the SEC is at a similarly early stage of its own investigation.

The report, cited by people familiar with the matter, said that neither Genesis nor DCG had been “accused of wrongdoing” so far. According to the report, the investigations seem to have focused specifically on the financial interaction between Genesis and DCG. cryptocoin.com As we reported, in late June it was revealed that Genesis Trading was facing huge losses due to loans made to hedge fund Three Arrows Capital, which has now exploded. He then filed a request for $1.2 billion. DCG has claimed the Genesis claim.

Genesis, Gemini, DCG: Chain effect

A DCG spokesperson told Bloomberg on Friday that the company is not aware of any EDNY investigations, while a Genesis spokesperson told the news outlet that it is “maintaining regular dialogue” with regulators but cannot comment on any specific issues. In November, Genesis announced that its lending unit would suspend withdrawals, which had knock-on effects on companies like Gemini, which relied on Genesis for the Earn platform.

Gemini co-founder Cameron Winklevoss and DCG founder Barry Silbert have been openly bickering over the issues stemming from that suspension ever since. Genesis has also made massive layoffs over the past few months, changing executive leadership and nearly halving its headcount since August. The subsequent explosion of crypto empire FTX did more damage to Genesis. Following liquidity issues, Genesis suspended all withdrawals last month.

However, DCG kept its distance, stating that Genesis’ problems were theirs and that it operated as an independent company. In a letter to shareholders in November 2021, DCG founder Barry Silbert stated that he received a loan of approximately $575 million from Genesis Global Capital, due in May 2023. However, Silbert added that these intercompany loans are part of business as usual and are “always structured at arm’s length and priced at prevailing market interest rates.” But crypto exchange Gemini attacked DCG for holding more than $900 million in deposits from earnings products with Genesis. Gemini co-founder Cameron Winklevoss accused Silbert of stalling efforts to resolve the issue.

Genesis considers filing for bankruptcy

Genesis also turned to counsel to explore options that could go as far as potentially including filing for Chapter 11 bankruptcy. In early December, Genesis creditors filed claims totaling more than $1.8 billion. Grayscale, another DCG subsidiary, is also facing issues with its underlying Bitcoin trust product. According to the Bitcoin price of the Trust stock, the discount exceeded 50 percent last month.

This shows a lack of confidence in the product or the ability of investors to monetize it. Genesis and DCG spokespeople did not immediately respond to requests for comment. A DCG spokesperson told Bloomberg on Friday that the company is not aware of any EDNY investigations, while a Genesis spokesperson told the news outlet that it is “maintaining regular dialogue” with regulators but cannot comment on any specific issues.

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