Following the various setbacks encountered by its various subsidiaries, in particular Genesis which recently laid off 30% of its staff, Digital Currency Group (CDG) is now under the supervision of the United States Securities and Exchange Commission (SEC) and the office of the Eastern District Attorney of New York.
Digital Currency Group and Genesis under the scrutiny of investigators
According to information from Bloomberg, which cites people familiar with the case, US federal authorities, including the Securities and Exchange Commission (SEC) and the New York Eastern District Attorney’s Officeare closely investigating the financial operations of Digital Currency Group (DCG).
Recall that the DCG is a leading consortium within the cryptocurrency ecosystem, since it brings together the CoinDesk media, the mining company Foundry, GrasyScale Investments, Luno and the cryptocurrency loan company Genesis. .
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According to the reported information, it is the internal operations between Genesis and its parent company that are scrutinized, although for the moment, no particular fact is yet blamed on the different companies. However, the investigation is still in its early stages, and authorities are said to be reviewing various interviews and documents.
On his side, the DCG claims to have nothing to be ashamed of and does not understand the possibility of an investigation against him:
“DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge or reason to believe that there is an Eastern District of New York investigation into DCG. »
Same story for its subsidiary Genesis, which did not wish to comment on the situation and which simply added:
” Genesis maintains regular dialogue and cooperates with regulators and relevant authorities when it receives inquiries. »
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DCG in turmoil
Although we currently do not know the specific objectives of the US federal authorities regarding this investigation, it is nevertheless not surprising that the group is attracting the attention of regulators.
And for good reason, DCG, which weighed more than 10 billion dollars not so long ago, is currently in a state of great fragility following the setbacks observed by Three Arrows Capital (3AC), the bankrupt fund in which Genesis was involved for a sum of several billion dollars.
If the group were to find itself in a critical situation, the cryptocurrency ecosystem would be particularly affected given the number of projects that would be impacted directly or indirectly. Effectively, the group has invested in more than 200 companies specializing in cryptocurrenciesand handles billions of dollars daily.
This is done in particular through Grayscale Investments, its subsidiary which offers trusts on various cryptocurrencies, and more particularly on Bitcoin (BTC), the company also owning 3% of all BTC in circulation. One of its top products, the Ethereum Trust (ETHE), is currently attracting a lot of attention given its massive discount to its benchmark value, much like the BTC offered by the company.
In addition, Genesis very recently announced that it was laying off 30% of all its international staff and that it did not rule out a future bankruptcy filing. given its massive debt accumulation of around $3 billion.
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Source: Bloomberg
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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