The US Securities and Exchange Commission (SEC) and the US Department of Justice's Eastern District of New York are reportedly investigating Digital Currency Group (DCG), a crypto conglomerate.
The authorities are reportedly investigating internal transfers between DCG and its subsidiary, Genesis Global Capital, a crypto lending firm. The investigation involves both the Department of Justice and the Securities and Exchange Commission, and both companies have reportedly been asked for interviews and documents.
A spokesperson for DCG stated that they were unaware of the investigation and that the company has a rooted culture of integrity and has always conducted its business lawfully.
No indictment has been brought against DCG, nor has either the United States Department of Justice or the Securities and Exchange Commission provided any information about the case.
Genesis Global Capital has experienced financial difficulties following the collapse of FTX in November. According to the company's disclosure on November 10, it has $175 million locked up in an FTX trading account. As a result, Genesis halted withdrawals on November 16 due to liquidity issues and has enlisted the help of investment bank Moelis & Company to restructure.
Gemini, a crypto exchange, claims that DCG failed to repay Genesis, leading to Genesis defaulting on payments to Gemini's clients. Genesis owes a total of $900 million to Gemini. The two companies had previously operated a product called Gemini Earn, which allowed crypto investors to earn 8 percent interest on their crypto loans.
Digital Currency Group (DCG) has a number of subsidiaries, including Grayscale Investments, media outlet CoinDesk, crypto exchange Luno, and Bitcoin mining company Foundry. Most of Grayscale's trust funds are currently trading at a discount. On January 4, Ethereum Classic Trust was trading at the largest discount of 77 percent, followed by Litecoin Trust at 65 percent, and Bitcoin Cash Trust at 57 percent.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash