DCG Investigated by US Authorities Over Internal Transfers To Crypto Empire

US authorities are looking into Digital Currency Group (DCG)’s internal financial practices a day after the business announced the shutdown of its wealth management division. According to sources familiar with the matter, Grayscale’s parent group, DCG, and troubled crypto lender Genesis are under investigation for internal transfers between the two entities. The investigation included examining the information provided by the DCG to the investors regarding these transfers. Currently, in the preliminary stages, prosecutors are reviewing internal company documents. Neither DCG nor its founder, Barry Silbert, have been accused of any wrongdoing. For further reading, check bitcoin and the taxman navigating the complexities of cryptocurrency taxation.

In response, the DCG said it is fully cooperating with the authorities and remains committed to transparency and compliance. Genesis, a subsidiary of the embattled DCG, declined to comment on specific legal issues or regulatory matters related to the investigation. Nevertheless, the company claimed that when questions are made, it has open lines of communication and works with the appropriate authorities. Regulating organisations including the Eastern District of New York’s attorney’s office and the US Securities and Exchange Commission (SEC) have not commented on the probe. prior to making any public statements or taking further action, it is anticipated that these regulatory authorities will carry out their own due diligence and review the findings.

Genesis Drags DCG Into Trouble

After the demise of cryptocurrency exchange FTX, which resulted in liquidity issues, Genesis, a crypto lender, recently faced significant challenges. However, DCG has maintained its position of separation, saying that Genesis’ troubles are it’s own and insisting on its status as an independent company. In 2021, a letter was written to shareholders, in which DCG founder Barry Silbert disclosed that they had received approximately $575 million in debt from Genesis Global Capital, due in May 2023.

Silbert clarified that these intercompany loans were conducted as part of regular business operations, was independently structured, and were priced at prevailing market interest rates. Meanwhile, crypto exchange Gemini criticized Digital Currency Group as it holds more than $900 million in deposits from its earnings products with Genesis. 

Genesis: Embattled Subsidiary Faces Investigation

Crypto lender Genesis, a subsidiary of Digital Currency Group (DCG), finds itself embroiled in the ongoing investigations. As one of DCG’s subsidiaries, Genesis has come under scrutiny amidst the probe conducted by US authorities. The company has chosen not to provide comments regarding the specific legal matters at hand, maintaining its stance of non-disclosure. It is worth noting that Genesis has faced its share of challenges, including liquidity issues and the suspension of all withdrawals. These issues have had a ripple effect, impacting both Genesis and its parent group, DCG. However, DCG has maintained its position that Genesis’s troubles are separate and that the subsidiary operates independently. As the investigations unfold, Genesis remains entangled in legal scrutiny, with regulators closely examining the internal financial dealings of both DCG and its subsidiary. Further developments and outcomes of the investigation are awaited.

Genesis: Troubles Mount as DCG Feels the Impact

Genesis, the crypto lender, faced a series of challenges that took a toll on both its operations and its parent company, Digital Currency Group (DCG). However, the situation worsened with the subsequent collapse of FTX, exacerbating Genesis’ healing process. On November 16, Genesis halted customer withdrawals, further adding to the turmoil. The woes of Genesis became intertwined with the crypto exchange Gemini. The Winklevoss twins, founders of Gemini, claimed that Genesis owed them $1.675 billion, with a portion of the debt belonging to users of Gemini’s Earn program. Despite DCG’s founder, Barry Silbert, stating that there was no outstanding debt to Genesis, the twins rejected his response. They urged Silbert to acknowledge the role of DCG and himself in the matter, stating that they could not accept the notion that they were “innocent bystanders” and had no involvement in the situation.