US officials are looking into the Digital Currency Group: Report

By: Michael Wilson

US officials are looking into the Digital Currency Group: Report

January 9, 2023 5:31 AM

According to reports, the FBI is looking into money transfers between Digital Currency Group and its subsidiary Genesis.

Bloomberg reports that the US Department of Justice's Eastern District of New York and the SEC are looking into DCG, a crypto conglomerate.

According to the article, which cites persons with knowledge of the situation, the authorities are investigating transactions between DCG and its crypto lending company, Genesis Global Capital. The SEC is also conducting an investigation at a similar early level, and prosecutors have already asked both companies for interviews and documentation.

No charges have been filed against DCG, and neither U.S. government agency has released any details about the investigation. According to a DCG representative, the firm has not been made aware of any investigation.


"DCG has always done business in a legal and ethical manner, and its culture values these qualities highly. To our knowledge, DCG is not under investigation by the Eastern District of New York."

Following the November collapse of FTX, a wave of instability has spread to other businesses, and Genesis is among them. The company said on November 10 that it has $175 million in an FTX trading account, which it cannot access. Genesis has hired investment bank Moelis & Company to help with restructuring after it had to restrict withdrawals on November 16 owing to liquidity difficulties.

There is a $900,000,000 debt owed by Genesis to the cryptocurrency exchange Gemini. As a team, they managed the Gemini Earn product, which offers crypto loan investors a return of 8% per annum. According to Gemini, the inability to pay off Genesis by DCG is what caused Gemini's clients to go unpaid.

Grayscale Investments, CoinDesk (a news site), Luno (a cryptocurrency exchange), and Foundry (a Bitcoin mining company) are all DCG subsidiaries. Cointelegraph reported on January 4 that all three of Grayscale's trust funds were trading at discounts. The Ethereum Classic Trust was trading at the largest discount of 77%, followed by the Litecoin Trust (at 65%) and the Bitcoin Cash Trust (57%).