DCG is Under the Surveillance of the US Government. Could it be Another Possible Fud?

Digital Currency Group, a crypto conglomerate, has been in the news for less than positive news lately, as last week, they announced the layoff of more workers at their Genesis Global Trading Division while simultaneously announcing the closure of their wealth-management division by the name H.Q. This week, the conglomerate has made it into the news again for being under investigation by the U.S. government.

The U.S. authorities have been investigating the internal transfers happening on Digital Currency Group and down to its subsidiary Genesis. The investigation is supposedly on the conglomerate, its lending platform, and the transfers between them. 

There have been requests for interviews by prosecutors with people familiar with the details of the matter from both companies, and the SEC is already running a similar early-stage investigation. While the investigation is ongoing, no indictment has been brought on the group of companies yet, and the U.S. authorities have not provided many details on the case. A spokesperson also reported for the conglomerate that they had initially been unaware that there was an investigation going on regarding their companies. With the company’s history of a culture of integrity and the conduction of business lawfully, an investigation is shocking. Still, without an indictment, it may be a check-in on some irregular company transactions.

Genesis was one of the many crypto companies affected and exposed to the FTX collapse in November last year. It unluckily has $175 million currently locked up in an FTX trading account, with no knowledge of when retrieval would be possible. The company was forced to halt withdraws last year in November after facing liquidity issues. Still, the company has now engaged with investment bank Moelis & Company to offer assistance with the restructuring of Genesis.

Genesis is also in trouble for owing $900 million to a crypto exchange by the name Gemini after the two companies had collaborated for the creation of a product called Gemini earn with the intent to allow investors to make 8% interest on their crypto loans and Gemini also claimed that Digital Currency Group was the one that failed to repay Genesis, which lead to Gemini’s failure to pay their clients. This could be one of the transactions that cast suspicion on the conglomerate and its subsidiary’s activities, causing the U.S. government to feel the need to investigate.

The United States Department of Justice Eastern District of New York and the Securities Exchange Commission are investigating. According to a report made by Bloomberg, the conglomerate has received hit after hit, with Genesis barely hanging on the edge even after downsizing and stopping withdrawals, could there be more considerable suspicions that are being noted by the authorities, and could this be the start of a possible fud for Digital Currency Group.

The conglomerate has already had to make the difficult decision of closing down one of its subsidiaries as a result of the current market and as a way to limit companies that funds have to be directed to but with hopes that they could revisit the wealth-management company in the later future when things are much stable with the way things are going for the conglomerate, that might be an untouchable future. However, nothing is set in stone as the U.S. government has not indicted the conglomerate or released much information on the investigation for the extent or details of the case to be known.

Could This Be Fud? 

There needs to be more information on the investigation for this to be decided. All that is known is that the conglomerate is going through difficult times, and the harsh crypto winter is not helping its case, but there is a chance the tides may turn for them, so nothing is set in stone. It is also only possible to decide if they are in big trouble with enough information on the case. It could be a routine check after seeing the aftermath of the FTX collapse and a way to ensure that it doesn’t repeat itself, especially with Genesis having funds belonging to Gemini.