Blockchain Firm DCG Faces Scrutiny Over Subsidiary Genesis' Financial Transactions

An ongoing investigation has been launched into Digital Currency Group (DCG) and its subsidiary, Genesis Global Capital.

New York Attorney General Letitia James, along with federal prosecutors and the U.S. Securities and Exchange Commission, is looking into transactions and loans between these two companies.

The probe centres on financial dealings between DCG and Genesis. Last year, DCG reportedly received around $575 million in loans from its subsidiary.

A letter from DCG's CEO Barry Silbert has also caught investigators' attention. The letter mentions a $1.1 billion promissory note linked to DCG's assumption of liabilities from the hedge fund Three Arrows Capital.

The promissory note's disclosure to investors has sparked interest among investigators.

DCG is being represented by former acting U.S. Attorney Seth DuCharme in this case.

The outcome of the investigation's scrutiny remains uncertain. DCG has stated its cooperation with regulatory bodies and investigative agencies.

The company stressed that transactions between Genesis and DCG were carried out at prevailing market interest rates, maintaining an arm's length basis.

Genesis, facing liquidity issues in the crypto bear market, filed for Chapter 11 bankruptcy in January.

The filing indicated liabilities ranging from $1 billion to $10 billion, alongside corresponding assets.

Genesis stands as the largest unsecured creditor of FTX, owed $226 million. However, both companies recently settled their dispute.

DCG's extensive venture capital portfolio includes Grayscale, Genesis, CoinDesk, and approximately 200 other crypto-related entities.

The company also holds equity in firms like the crypto exchange Luno and advisory firm Foundry.