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The financial maneuvers of the Digital Currency Group (DCG), with a specific focus on its offshoot, Genesis Global Capital, have caught the watchful eye of authorities. A probe led by New York Attorney General Letitia James, supplemented by whispers from insiders, paints a picture of a deepening investigation.
Alongside federal lawyers, the U.S. Securities and Exchange Commission is digging deep, hoping to glean insight from individuals connected to both Genesis and DCG. The heart of the probe? Loans and financial exchanges between the two. Notably, a $575 million loan from Genesis to DCG has raised eyebrows. Adding fuel to the fire is a controversial letter penned by DCG's main man, Barry Silbert. Within, he alludes to a staggering $1.1 billion promissory note, an outcome of DCG taking on debts from Genesis related to the fall of a significant hedge fund, Three Arrows Capital (3AC).
The way this promissory note was presented to shareholders is now a cornerstone of this inquiry. Standing in DCG's corner, former acting U.S. Attorney Seth DuCharme wields the legal reins.
As of now, it's still uncertain if formal complaints will emerge from the clouds of suspicion. However, a voice from within DCG assures the public of their transparency and collaboration with the regulatory watchdogs. The firm emphasized that all financial exchanges between DCG and Genesis adhered to prevailing market norms.
Earlier this year, Genesis grappled with financial turbulence, leading them to seek Chapter 11 bankruptcy protection. This move came after a series of financial mishaps in the crypto world, including the downfall of 3AC and the crypto powerhouse, FTX. With outstanding dues from FTX and its allies amounting to $226 million, Genesis finally found common ground for a resolution.
DCG, a well-known firm in the crypto world, backs big names like CoinDesk, Grayscale, and Genesis, and nearly 200 other firms in the realm. They also have stakes in Luno, a crypto exchange, and advisory heavyweight Foundry.
