Report: Federal Prosecutors in New York Probe Digital Currency Group and Subsidiary Genesis

Following accusations from Gemini co-founder Cameron Winklevoss in an open letter to Digital Currency Group CEO Barry Silbert, a report citing “people familiar with the matter” states that federal prosecutors from New York are scrutinizing transfers between Digital Currency Group and its subsidiary, Genesis Global Capital.

According to a recent letter from Cameron Winklevoss, co-founder of the crypto exchange Gemini, Digital Currency Group (DCG) has until Jan. 8, 2023, to resolve liquidity issues between Gemini and the lending unit of Genesis Global Capital. It has been reported that Genesis owes $900 million to Gemini Earn customers and both companies’ lending arms have halted withdrawals since mid-Nov. 2022.

Reports have disclosed that Genesis was impacted severely by the collapse of FTX and Alameda Research and Gemini has recently been informed that it may face a potential class-action lawsuit over the matter. Bloomberg states that federal investigators are getting involved and are reportedly looking into transactions between Digital Currency Group (DCG) and Genesis. “People familiar with the matter,” who requested anonymity, told the publication that prosecutors in the Eastern District of New York and the U.S. Securities and Exchange Commission (SEC) are investigating the issue.

Bloomberg requested a comment from Silbert and a Digital Currency Group (DCG) spokesperson responded. “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,” the company spokesperson said in a statement. The news outlet also reported that “the SEC and US Attorney’s Office for the Eastern District of New York declined to comment.”

The Bloomberg editorial follows a series of reports about alleged probes by U.S. authorities into crypto firms that have either resulted in enforcement, never materialized, or have yet to come to fruition. In the past 12 months, reports citing “people familiar with the matter” have stated that U.S. investigators are probing crypto reserve auditors, U.S. taxpayers, Three Arrows Capital, Twitter, Coinbase, Binance, and Uniswap, among others.

What do you think about the report that alleges Digital Currency Group (DCG) and Genesis are being investigated by U.S. authorities? Share your thoughts on this topic in the comments section below.