According to Bloomberg, the investigations, which seem to be in the early stages, are concentrated on money transfers between DCG and its Genesis division.
U.S. government representatives The U.S. Department of Justice's Eastern District of New York (EDNY) and U.S. Securities and Exchange Commission investigators are looking into transfers between Digital Currency Group and Genesis, a conglomerate unit, according to a late-Friday Bloomberg story.
According to the article, the DOJ's Eastern District of New York investigators have thus far asked DCG and Genesis for interviews and papers, while the SEC's investigation looks to be in a similar early stage. According to the article, which relied on sources with knowledge of the situation, neither Genesis nor DCG, which also serves as the parent company of CoinDesk, had "been accused of wrongdoing" as of yet.
According to source, the probes appear to be particularly focused on the financial interactions between Genesis and DCG.
Due to loans made to the now-imploded hedge fund Three Arrows Capital, CoinDesk revealed in late June that Genesis Trading was suffering significant losses and later filed a claim for $1.2 billion. DCG took on the Genesis claim.
Genesis said in November that its lending division will halt withdrawals, which had an impact on businesses like Gemini, which depended on Genesis for its Earn platform. Barry Silbert, the creator of DCG, and Cameron Winklevoss, the co-founder of Gemini, have recently started a public spat about problems related to this suspension. In the recent months, Genesis has also made significant workforce reductions, changing its top leadership, and virtually reducing its headcount since August. The following collapse of the crypto-empire FTX significantly harmed Genesis's financial statements.
Genesis has also hired advisors to investigate possibilities, some of which may even entail filing for Chapter 11 bankruptcy.
Grayscale, a different DCG division, is having problems with a major bitcoin trust solution. Last month, a discount between the price of a share of the trust and the price of bitcoin fell below 50%, signaling a lack of confidence in the product or in investors' ability to get their money back.
Requests for comment from Genesis and DCG spokespeople were not immediately fulfilled. A Genesis representative informed the news source that the business "maintains frequent interaction" with authorities but was unable to comment on any particular concerns, while a DCG spokesman said that the company was not aware of any EDNY probe.