- The New York Attorney General’s office is reportedly investigating Digital Currency Group
- Latetia James’ office is investigating the connection between DCG and Genesis Global Capital
- Concerns have been raised over a $1.1 billion promissory note from DCG to Genesis
The Office of the New York Attorney General is allegedly looking into the affairs of Barry Silbert’s Digital Currency Group (DCG) following its rumbling disagreements with Genesis Global Captial. Bloomberg reported Friday that Letitia James’ office is examining the nature of its relationship with its parent company amid the ongoing battle between DCG and Genesis, a company in its stable. DCG failed to honor a $630 million loan repayment in May, which had a knock-on effect with regard to the Winklevoss’ crypto exchange Genesis, which itself is owed hundreds of millions from Genesis.
DCG-Genesis Relationship Under the Microscope
Bloomberg cited “two people familiar with the investigation” as saying that the New York Attorney General’s office has requested information from former Genesis executives, including one who only stayed for three months before departing, following federal prosecutors and the Securities and Exchange Commission conducting their own investigations.
Cryptocurrency lender Genesis suffered significant losses during last year’s crypto market downturn, partly due to the collapse of digital-assets hedge fund Three Arrows Capital and crypto exchange FTX. As a result, regulators are looking into potential irregularities in Genesis’s operations.
DCG CEO Silbert attracts strong accusations by Gemini CEO Cameron Winklevoss of engaging in “fraudulent behavior” and fostering “a culture of lies and deceit” after being frustrated in his attempts to get his customers’ money back from Genesis, froze them in November last year.
James Has Another Target in Her Sights
DCG has assured its cooperation with regulators and investigative agencies, stating it has always conducted its business lawfully and ethically. Valued at $10 billion at one point, the company has publicly revealed that it received around $575 million in loans from Genesis, with concerns raised over a $1.1 billion promissory note from the parent company, which may have implications for investors.
DCG has hired former Acting US Attorney Seth DuCharme to represent it in response to the investigations.
The investigation is the latest in a string of efforts by James in her war against cryptocurrency companies. Letitia James has been actively pursuing legal action against various crypto firms in New York, including a civil lawsuit against the former CEO of Celsius Network Ltd., Alex Mashinsky, for alleged fraud.
