Digital Currency Group Subject of Alleged Federal Probes

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• The Digital Currency Group is allegedly the target of federal probes concerning its relationship with one of its subsidiaries
• Two U.S. entities are said to be looking into the dealings of the DGC and an unnamed subsidiary
• The subsidiary is thought to be Genesis, which is in financial trouble

US authorities are reportedly investigating Digital Currency Group (DCG) and its Genesis lending subsidiary over the flow of funds between the two firms. According to Bloombergthe US Securities and Exchange Commission (SEC) and the US Attorney’s Office for the Eastern District of New York are both conducting probes, though it is not yet clear what specific activity is being scrutinized. The news comes just days after Gemini co-founder Cameron Winklevoss publicly excoriated DGC CEO Barry Silbert and the company announced that it was closing its wealth management wingHQ.

Links Between DGC and “Embattled Subsidiary” Examined

News of the investigation surfaced on Saturday, with Bloomberg reporting that federal prosecutors were particularly interested in transfers between the DGC and “an embattled subsidiary that offers crypto lending services”, according to its sources. They are also delving into what investors were told about those transactions.

It doesn’t take a genius to work out that the unnamed lender is Genesis, whose Genesis Global Capital halted withdrawals in Novembertrapping $900 million of Gemini Earn customers’ money on the platform. The alleged movements of money, which have a distinct FTX-Alameda-style ring to them, have led to prosecutors requesting interviews and documents with those inside both companies, but Bloomberg’s insiders stressed that the probes are in early stages and no one has yet been accused of any wrongdoing.

The DGC told Bloomberg that it has “a strong culture of integrity and has always conducted its business lawfully”, although whether Cameron Winklevoss agrees with this is another matter.