US authorities are currently looking into Digital Currency Group (DCG)’s financial operations, according to a story in Bloomberg that cited persons familiar with the situation.
Federal investigators were reportedly looking into transfers involving Genesis, a unit of the crypto giant DCG. Investigators investigate any wrongdoing and whether investors knew about the transactions between the two firms.
Prosecutors have started asking the involved parties for information. The (SEC) oversees the financial industry and is also looking into the crypto firm. The report continued the probe is still in its early stages, and no corporation has been accused of misconduct.
Since FTX’s collapse in November, DCG has been caught in the center of a hurricane. Genesis stopped accepting client withdrawals after the defeat of the exchange, citing market conditions and raising concerns about the company’s financial stability.
Despite CEO Barry Silbert’s claim that the transactions between the two companies were undertaken only for commercial objectives, they have nonetheless led to several problems. Genesis provided DCG with a $575 million loan in November and a $1.1 billion promissory note due in June 2032.
DCG Disputes Any Awareness Of Such Inquiries
The business has denied knowing anything about the probes in the interim. A DCG representative claimed that the company has continuously operated legally and was unaware of official investigations.
Genesis, however, declined to respond when asked whether it was the subject of any inquiries. Instead, the company claimed that it works with law enforcement when it receives queries.
The probes only make things worse for DCG, a crypto conglomerate. Cameron Winklevoss, the co-founder of Gemini, gave the company until January 8 to fix the problems earlier this week. He slammed Silbert for using delay strategies and insisted that DCG and Genesis were thoroughly mixed up.
Due to the murky financial situation, there is concern that Grayscale, a different business controlled by DCG, may decide to liquidate a few of its trusts to pay Genesis’ creditors. According to several analysts, the liquidation would increase sell pressures on the cryptocurrency market.
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In addition, sources indicate that Genesis has let go of 30% of its workforce and is considering declaring bankruptcy. On January 31, the company will close its wealth management section. Derar Islim, CEO of Genesis, stated that the company would need more time to resolve its financial predicament.
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