- Federal authorities in Brooklyn are scrutinizing transfers between DCG and a troubled subsidiary that offers crypto lending services.
- SEC is also reportedly probing DCG
- Winklevoss twins have claimed that troubled DCG owes Genesis a total of $1.675 billion.
Digital Currency Group, the parent company of crypto broker Genesis is reportedly facing a US probe over its alleged suspicious internal transfers. As per the sources, Federal authorities in Brooklyn are scrutinizing transfers between Digital Currency Group and a troubled subsidiary that offers crypto lending services.
As per media reports, the investigation is still in its early phases, and neither Silbert, Digital Currency Group Inc., nor any of its subsidiaries have been accused of wrongdoing yet. The Securities and Exchange Commission(SEC) is also reportedly looking into the internal functions of DCG. In response to the media reports on the probe, Genesis said that it doesn’t comment on specific legal or regulatory matters.
The latest development comes amid DCG facing mounting pressure from crypto moguls and Gemini co-founders Winklevoss twins. Cameron Winklevoss claims that DCG owes Genesis a total of $1.675 billion. The twins have accused Silbert of using this money to buy back shares, fund illiquid investments, and further boost Grayscale funds’ net asset value instead of paying off third-party debt.
Winklevoss Twins have given Barry Silbert, the chief exec of Digital Currency Group, a short deadline to publicly commit to resolving the situation that led to Gemini Earn halting withdrawals in late 2022.
In response, Silbert has stated that DCG is current on all its interest payment obligations. Reportedly, DCG had bought the debt that bankrupt Three Arrows Capital(3AC) owed to Genesis with a $1.1 billion promissory note due by 2033.
DCG is one of the world’s prominent crypto companies and was once valued at $10 billion, with billions in assets under management.
However, in the wake of the implosion of Sam Bankman-Fried’s FTX empire, one of DCG’s subsidiaries, Genesis Global Capital, found itself in massive debt, posing a severe threat to the whole Digital Currency Group empire.
According to media airports, Genesis Global has $2.8 billion in outstanding loans on its balance sheet, with around 30% of its lending made to related parties, including its parent company DCG.