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U.S. Authorities Investigate The Financial Situation Between Digital Currency Group And Genesis Global

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ByMaria Fairchild

Jan 8, 2023

Following the FTX catastrophe, Genesis Global lending firm suspended all trading activities on its platform. This move was in line with the losses the firm incurred after the FTX collapse. 

Authorities are now looking into the financial operations between the parent firm, Digital Currency Group, and its now insolvent subsidiary, Genesis Global.

Ongoing Investigation Into Parent Firm And Subsidiary

Genesis Global and Grayscale are both subsidiaries of Digital Currency Group (DCG). Both of these companies were impacted by the FTX exchange’s liquidation crisis and experienced a liquidity crunch.

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The parent firm, DCG, recently announced the closure of one of its divisions in the firm. This announcement brought the U.S. authorities lurking and probing around for information on the financial ties DCG had with the Genesis Global Lending firm.

The Federal Authorities, according to reports, have initiated a probe into the private financial transactions between DCG and Genesis Global, which is currently experiencing a liquidity crisis. 

The authorities are also looking into the details DCG disclosed to its investors regarding the financial transactions between both firms.

The United States Prosecutors and the Securities and Exchange Commission (SEC) are working jointly on this investigation.

Barry Silbert, CEO of DCG, has not yet been called in for questioning as this investigation kicked off today, the 7th of January 2023. 

Genesis Global has however claimed that it will not comment on any intrusive legal or regulatory inquiries. 

Genesis Global Liquidity Crisis

Following the FTX collapse in October, Genesis Global announced that it was suffering liquidity issues and would suspend withdrawals from the platform. This suspension also affected the parent firm, DCG.

DCG, on the other hand, has preferred to steer clear of any ties with the lending firm, claiming that Genesis Global, though being a subsidiary, is an independent company and can shoulder its own responsibilities and problems.

In a letter drafted to DCG shareholders, Silbert revealed he had received a loan of over $570 million from the subsidiary firm Genesis in 2021 which is to be paid in the first quarter of 2023.

Silbert noted that these loans are normal recurring transactions that both organizations engage in and have a structured repayment strategy.

Cameron Winklevoss, the co-founder of Gemini, recently called out Barry Silbert on Twitter, accusing him of impeding the recovery of his $900 million deposit on the Genesis Global Firm.

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