Crypto conglomerate Digital Currency Group (DCG) has fallen under the investigation of United States Department of Justice’s Eastern District of New York and Securities and Exchange Commission (SEC), as mentioned by Cointelegraph quoting Bloomberg.
According to Cointelegraph, the authorities are investigating internal transfers between DCG and its subsidiary crypto lending firm Genesis Global Capital. It is believed that prosecutors have made attempts for interviews and documents from both companies while the SEC is processing an early-stage inquiry.
“DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG,” a DCG spokesperson stated.
On the basis of information by Cointelegraph, Genesis faced implications of FTX’s collapse in November, 2022. On November 10, 2022, the firm’s disclosure unveiled that it had $175 million locked up in an FTX trading account. It is believed that on November 16, 2022, Genesis stopped withdrawals on account of liquidity problems and engaged itself with investment bank Moelis & Company for restructuring purposes.
Moreover, Cointelegraph noted that Genesis owes $900 million to crypto exchange Gemini. Reportedly, the two platforms functioned together on a product called Gemini Earn, which permits crypto investors to earn eight percent interest on their crypto loans. Sources stated that Gemini made the claim around DCG’s failure to pay Genesis which resulted in failure of payments to Genesis clients.
(With insights from Cointelegraph)