Digital Currency Group, better known as DCG, is currently under investigation by US authorities.
According to a report by Bloomberg, US prosecutors in New York – specifically, the city of Brooklyn – are evaluating internal transfers between the multibillion-dollar crypto conglomerate and its crypto lending arm, Genesis Global Capital.
The crypto lending company has been in the spotlight for a long time after its huge losses last year.
According to an anonymous source close to the investigation, federal prosecutors have conducted interviews with certain personnel and requested office documents.
Commenting on the matter, a DCG spokesperson denied that the American venture capital firm was under investigation.
He said:
“DCG has a strong culture of integrity and has always conducted business lawfully. We have no knowledge or reason to believe that there is any investigation by the Eastern District of New York into DCG.
That said, the Bloomberg report suggests that DCG could be involved in a two-way battle as the company is also under investigation by the Securities and Exchange Commission (SEC). However, so far there has been no indictment of DCG by any party, and no real information has been disclosed by the US authorities.
DCG and its relation to Genesis
Genesis Global Capital’s troubles began mid-last year after the collapse of the famous hedge fund company Three Arrows Capital. During this period, the crypto credit service recorded a heavy loss of $1.2 billion.
A few months later, Genesis also suffered another hit after the billion dollar crypto exchange FTX filed for bankruptcy. The fall of FTX created a liquidity crisis for Genesis, which caused the company to suspend withdrawals and loan requests until now.
To assuage public concern, DCG has always shied away from Genesis’s wording that the company is an autonomous entity.
In a circular to shareholders in November 2022, CEO and founder of DCG, Barry Silbert, disclosed all existing loans between the companies. He said that all loans are made on a “long basis”, and the payments are arranged according to the prevailing market interest rate at the time.
Will the Crypto Market Survive the DCG?
Digital Currency Group is one of the largest crypto conglomerates in the industry, with an AUM value of $50 billion as of September 2021.
In addition to Genesis Global Capital, the company also has other subsidiaries, including Grayscale Investments – a leading digital asset manager that owns more than 600 BTC tokens, the CoinDesk media publication, the popular Bitcoin mining service Foundry, and Luno, a cryptocurrency exchange with more than 10 million. customers.
If the current investigation into DCG by the US authorities reveals any information that causes negative sentiment around the conglomerate and its subsidiaries, the ripple effect could be catastrophic for the entire crypto market.
However, there is currently no indication of this happening, and investors may remain calm awaiting further information on the investigation.
So far, the crypto market continues to recover after the fall of FTX in November. At the time of writing, the market leader, Bitcoin has gained by 2.4% in the last seven days and is currently trading at $16,937.52 according to data from Coinbase. TThe premier cryptocurrency has the largest supply of crypto assets, with a total market cap of $326.141 billion.
BTC trading with a market cap of $326.141B | Source: BTC Chart on Tradingview.com
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