genesisAccording to a Bloomberg article, U.S. regulators are looking into the fund transfers between Digital Currency Group and its Genesis lending subsidiary.
According to persons familiar with the case, Bloomberg reported that federal prosecutors in the Eastern District of New York are investigating transfers between DCG and Genesis and the Securities and Exchange Commission has also opened an investigation. Before the FTX cryptocurrency exchange collapsed in November, there was a criminal investigation underway.
According to Bloomberg, the investigations are just beginning, and neither DCG nor any of its subsidiaries have received any accusations of wrongdoing. What exact activity is being investigated is also unclear.
“DCG has a strong commitment to ethics and has always operated legally,” Bloomberg noted in a statement made by a company representative.
“We are unaware of any Eastern District of New York investigations into DCG and have no reason to think there are any.”
3AC and Genesis struggle to stabilize
The crypto struggles of the previous year have had an impact on DCG. The cryptocurrency hedge fund Three Arrows Capital, which failed in July, had received more than $2 billion in financing from Genesis. Cryptopolitan also covered in an article that the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) were investigating Three Arrows for possible violations of the investor conduct rules.
The regulators were specifically looking into whether the business misled investors about its holdings and neglected to register with the two organizations. The SEC and CFTC however stated that no investigation is currently underway
More recently, Genesis suspended redemptions as a result of the impact of FTX’s bankruptcy in November. The demise of crypto hedge fund Three Arrows, claims the company, prompted it to take steps to improve liquidity and lower risk on its books. However, a rush of withdrawals following the FTX crash strained its liquidity.
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