DCG Was Probed by New York Attorney General Following Connections With Genesis

According to reports, the New York Attorney General, Letitia James, is investigating Digital Currency Group (DCG), which is owned by Barry Silbert.

DCG has been linked to Genesis Global Capital, a cryptocurrency lender that recently filed for bankruptcy due to significant losses from the downfall of Three Arrows Capital and FTX, a digital asset exchange.

Bloomberg states that Attorney General James has been gathering information from previous executives of Genesis, particularly Michael Patchen, the former chief risk officer.

The report says federal prosecutors and the U.S. Securities and Exchange Commission (SEC) have started their investigation and are seeking to interview potential witnesses from both Genesis and DCG.

Regulators and prosecutors are focusing on a $1.1 billion promissory note related to the collapse of 3AC, which Silbert claims was created to assume liabilities from Genesis.

The investigation is not public, and it is unknown whether any complaints will be filed as a result. Gemini accused Silbert and DCG of defaulting on a $630 million debt payment earlier this year.

A few days ago, we revealed that it has been reported that Coinbase has been instructed by the U.S. Securities and Exchange Commission (SEC) to stop trading all cryptocurrencies except for Bitcoin (BTC) as the regulator prepares to take legal action against them.

The CEO of Coinbase, Brian Armstrong, has expressed that the SEC did not provide any additional details regarding the suspension of non-Bitcoin trading on the platform.

Armstrong has also disclosed that the SEC directed Coinbase to remove all assets except for Bitcoin, alleging that they were all securities. Despite Armstrong’s argument that this interpretation of the law was incorrect, the SEC did not clarify their position.

To prevent the possibility of shutting down the entire crypto industry in the U.S., Coinbase has decided to challenge the lawsuit in court. Recent court filings indicate that the SEC believes Coinbase was aware of potential violations prior to the initiation of the lawsuit.