Apparently, Genesis Global Capital’s subsidiary, Digital Currency Group, is the subject of a New York probe into financial activities.
Financial transactions involving Digital Currency Group’s (DCG) subsidiary, Genesis Global Capital, are currently being investigated. According to sources familiar with the situation cited by Bloomberg, the investigation is being carried out by New York Attorney General Letitia James.
According to reports, an investigation is underway by federal prosecutors and the U.S. Securities and Exchange Commission, and prospective witnesses connected to Genesis and DCG are being sought for interviews.
The probe allegedly looks into loans and other business dealings that took place between the companies.DCG disclosed that it had received loans from Genesis totaling about $575 million last year. Officials are also examining a letter to shareholders from DCG’s CEO and founder, Barry Silbert, in which he mentions a $1.1 billion promissory note that he claims came about as a result of DCG taking on Genesis’ obligations related to the failure of the hedge fund Three Arrows Capital (3AC).
The focus of the operation, according to the sources, has been the promissory note and how it was presented to investors. Seth DuCharme, a former acting US attorney, is defending DCG in this matter.
It is still unknown if any of these investigations will result in formal complaints. According to a DCG spokeswoman, the business is appropriately collaborating with regulatory bodies and investigating agencies, according to Bloomberg. The statement further stated that all business dealings were “always structured on an arm’s length basis and priced atprevailing market interest rates.”
In January, Genesis filed for Chapter 11 bankruptcy after experiencing months of liquidity problems due to the bear market and the failure of significant crypto businesses, such as 3AC and the cryptocurrency exchange FTX. According to the company’s statement at the time, its assets and liabilities were both assessed to be between $1 billion and $10 billion.
With $226 million in debt to FTX and its affiliates, Genesis is the largest unsecured creditor. The businesses recently came to a resolution to the conflict.
Grayscale, Genesis, and almost 200 additional crypto-related businesses are included in DCG’s venture capital portfolio. It also owns stock in other businesses, such as the cryptocurrency exchange Luno and consulting firm Foundry.