US authorities are reportedly investigating the financial dealings of Digital Currency Group (DCG) and its subsidiary Genesis which offers crypto lending services, Bloomberg reported on January 6th, citing people familiar with the matter told.
The person requested anonymity because the investigation has not been publicly disclosed. He told Bloomberg that Federal prosecutors in Brooklyn are examining the transfers between DCG and its subsidiary, as well as the information provided to investors about those transactions.
Additionally, according to the report, Federal prosecutors and the Securities and Exchange Commission are investigating Digital Currency Group and its subsidiaries. The probes are in the early stages, and no wrongdoing has been alleged.
This action was taken shortly after DCG revealed that it had to shutter its wealth management division, known as HQ, by the end of the month. It is due to the persistent bear market in cryptocurrency and the difficult economic climate, as reported by TronWeekly. Additionally, Genesis’ brokerage division was cutting off almost 30% of its workforce.
Whereas DCG’s founder, Barry Silbert, has recently faced public disputes with Gemini’s founder Cameron Winklevoss. Winklevoss has accused Silbert of delaying efforts to resolve the issue and claimed that his companies are “beyond commingled.”
DCG And Genesis In Trouble
According to Bloomberg, a DCG spokesman was directed by Silbert to respond to a comment request and claimed:
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.
On the other side, Genesis stated that it does not comment on specific legal or regulatory matters but maintains regular communication with regulatory bodies when it receives inquiries.
Furthermore, none of the legal authorities have yet commented. However, Bloomberg stated, “it’s unclear specifically which intercompany activity is drawing scrutiny.”
Nevertheless, according to a report by Bloomberg, the investigation into Barry Silbert’s business empire began before the recent problems at cryptocurrency exchange FTX, in which Silbert is also involved. This information comes from a source familiar with the criminal probe.