DCG, the crypto firm behind Genesis, Grayscale and CoinDesk, is being investigated in the US

For Hannah Perez

The Department of Justice, the SEC and New York prosecutors are conducting separate investigations into Digital Currency Group (DCG), parent of Genesis.

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  • US Authorities Investigate Crypto Conglomerate Digital Currency Group (DCG)
  • The SEC, New York prosecutors and the Justice Department lead separate investigations
  • DCG is the parent company of Genesis, Grayscale, CoinDesk and others
  • Genesis has run into difficulties with its lending unit and closed withdrawals in November

In the midst of a tumultuous time for the digital asset industry, the reputed cryptocurrency conglomerate, Digital Currency Group (DCG), has reached the radar of the United States authorities.

The US Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and officials from the Eastern District of New York (EDNY) are investigating the internal financial operations of Barry Silbert’s cryptocurrency company, according to forwarded a report of Bloombergwho cited people familiar with the matter.

According to the information, federal prosecutors in Brooklyn, New York, are examining transfers between DCG and Genesisa subsidiary that offers cryptocurrency lending and brokerage services.

Financial regulators and the DOJ are conducting separate investigations, the source suggested, and appear to focus on financial interactions between Digital Currency Group Y Genesis. Bloomberg indicated that the investigations are in their early stages and neither Silbert, nor DCG, nor any of their subsidiaries have been accused of committing irregularities.

Under federal investigation in the US

Digital Currency Groupwhich encompasses a handful of well-known companies in the industry, including grayscalethe digital asset manager that runs the largest investment fund Bitcoinand the news portal CoinDeskhas come under scrutiny recently in light of its lending affiliate’s financial difficulties.

Genesis Global Capitala lending unit of Genesis Global Tradingwas forced to stop client withdrawals in mid-November due to turbulence in the markets generated by the exchange crash FTX.

The problems had started earlier, when in mid-2022, genesis trading faced significant losses due to loans made to the hedge fund Three Arrows Capital (3AC), now bankrupt, as you remember CoinDesk, that the research reported. The firm filed a claim for $1.2 billion that DCG later took over.

A DCG spokesperson told Bloomberg on Friday that the company was not aware of any investigation by New York prosecutors. So far, the companies have not provided any additional details on the matter.

The recent suspension of withdrawals from Genesis(which still holds), has affected other businesses, including the exchange geminiwho trusted Genesis Capital for your performance program, Gemini Earn.

Genesis and its owner, DCG, have been working on a plan, although they have warned that the loan company could go bankrupt if liquidity is not restored. Most recently, this week, Genesis announced a new 30% cut in its workforce. DCG has been adamant that the problems are solely with that subsidiary.

DCG closes its wealth division

The news about the US investigation comes just two days after DCG announced that is shutting down a wealth management division called HQ. The closure will take effect from January 31, according to the company.

Due to the state of the broader economic environment and the prolonged crypto winter presenting significant hurdles for the industry, we have made the decision to close the headquarters.the company said in a statement. We are proud of the work the team has done and look forward to reviewing the project in the future.“.

Digital Currency Groupwhich is also the parent company of the cryptocurrency mining service provider Foundry Digitaland of moona London-based exchange, reportedly has more than US$3.5 billion in assets under management.

It should be noted that Genesis is not the only DCG subsidiary in trouble, as he points out CoinDesk. The flagship investment product of grayscalethe GBTC fund based on Bitcoinhas been falling remarkably and reached a record discount rate of more than 50% last month in relation to the price of Bitcoin.


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Article by Hannah Estefanía Pérez / DailyBitcoin

Edited image of Unsplash

CAVEAT: This is an informative article. DiarioBitcoin is a communication medium, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. They may not be suitable for retail investors, as the entire amount invested could be lost. Check the laws of your country before investing.