U.S Authorities Investigate Digital Currency Group Over Internal Transfers

  • Liquidity problems forced Genesis to halt all withdrawals related to parent firm DCP in December.
  • That saw United States authorities launching investigations into the firm’s internal monetary dealings.

United States authorities kick-started an investigation into Digital Currency Group’s internal monetary undertakings on January 7. That was after DCG revealed decisions to close its wealth management segment.

Digital Currency Group (DCG) is the parent company of cryptocurrency lender Genesis and Grayscale, and the two suffered massive liquidity problems during this writing. Sources with the situation’s familiarity stated that Brooklyn Federal authorities had launched a probe on internal transfers associated with the troubled Genesis and DCG.

Also, they are assessing what Digital Currency Group told investors about such transfers. Prosecutors will work with the United States SEC to conduct the investigation. Meanwhile, the investigation remains in its infancy stages, and authorities are yet to interview Barry Silbert and Digital Currency Group.

Genesis, DCG’s distressed subsidiary, said that it wouldn’t comment on specific regulatory or legal topics. However, Genesis cooperates with relevant authorities and regulators and ensures regular dialogue when it receives inquiries.

The Battle Between Genesis and DCG

Cryptocurrency lender Genesis suffered severe difficulties following the debacle of crypto exchange FTX. Liquidity issues forced Genesis to suspend withdrawals last month, linking parent firm DCG. Meanwhile, DCG remained silent, separating itself from Genesis’ issues, claiming that it runs as an independent firm.

Barry Silbert, DCG’s founder, told shareholders (November 2021) that Genesis Global Capital gave him loans worth $575M, which will be due in May this year (2023). Silbert stated that the intercompany loans were usual business transactions priced at the market’s interest rates and organized on a hand’s length basis.

Nonetheless, crypto exchange Gemini took umbrage to Digital Currency Group, claiming that it boasts over $900M in deposits from earned products with the distressed Genesis. Cameron Winklevoss, Gemini President, accused Barry Silbert of stopping plans to solve the matter. Also, he stated that Genesis and Digital Currency Group are indistinguishably connected.

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