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US authorities have now begun investigations into internal transactions between Barry Silbert’s Digital Currency Group (DCG) and its subsidiary, Genesis, for any wrongdoing as per a Bloomberg report citing familiar sources.
According to the report, prosecutors from the Eastern District of New York together with the US Securities and Exchange Commission (SEC) are probing the financial transactions between DCG and its crypto lending arm, Genesis. The authorities are also scrutinizing the information provided to investors pertaining to these transactions.
Although the investigations are not conclusive yet as it’s still in the preliminary stages, neither DCG nor any of its other subsidiaries have been accused of erring so far.
While it’s still unclear which of its activity has brought it under the lens of the authorities, a spokesperson from DCG was quoted as saying: “DCG has a strong culture of integrity and has always conducted its business lawfully”.
Interestingly, this investigation by US authorities follows after claims from Gemini co-founder, Cameron Winklevoss that both DCG and Genesis are closely knitted even though Barry says both firms operate independently. Cameron made the claims in an open letter while trying to resolve his company’s $900 million deposit stuck in Genesis.
DCG and its Other Subsidiaries are Having a Difficult time
Even though it’s only a couple of days into the new year the cryptocurrency empire DCG and its other subsidiaries have already had to make some hard decisions.
At the beginning of the year, the company announced the closure of HQ Digital, one of its wealth management firms.
The company has blamed the broader economic environment and the prolonged crypto winter for the closure of the division which once held $3.5 billion in assets under management. Bitvavo, a European crypto exchange is also trying to recover its almost $300 million stuck in DCG
Also, while citing the financial crisis, Genesis, last week further reduced headcount by 30% after it had initially axed 20%, of its 260 employees due to losses tied to the crypto hedge fund Three Arrows Capital. The troubled crypto firm also owes two groups of creditors $1.8 billion according to an earlier report and it’s also on the verge of a bankruptcy filing.
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