Silbert’s DCG is being investigated by DOJ, SEC over internal transactions

The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have opened investigations into Barry Silbert’s Digital Currency Group (DCG) to examine its internal money transfers and loans, as reported by Bloomberg News.

Prosecutors are looking into the transfers between the DCG, an embattled subsidiary of the company, who asked not to be named because the probe hasn’t been made public yet. The investigation also includes DCG investors and aims to discover if they were informed regarding these transfers and internal loans.

A DCG spokesperson commented on the matter upon Silbert’s request and told Bloomberg:

“DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe there is any Eastern District of New York investigation into DCG.”

At the moment, neither DCG nor Silbert are accused of any wrongdoing. However, the investigation is active, and prosecutors have asked for interviews and documents. The SEC and the DOJ have declined to comment on the matter.

Genesis

Crypto lender Genesis also got involved in the investigations as one of the subsidiaries of the DCG. The company said it didn’t comment on specific legal matters and added:

“Genesis maintains a regular dialogue and cooperates with relevant regulators and authorities when it receives inquiries,”

DCG took a heavy hit over Genesis’ financial troubles. In addition, Genesis was heavily affected by the collapse of Three Arrows Capital (3AC), one of the companies that declared bankruptcy after the Terra-Luna crash.

The FTX collapse a few months later didn’t help Genesis’ healing process. Shortly after the FTX collapse, on Nov. 16,  Genesis halted customer withdrawals. Then, on Jan. 5, the lender laid off 30% of its staff and signaled it might file for chapter 11 bankruptcy by saying it is trying to reduce costs and increase efficiency.

The troubles of Genesis got connected to the crypto exchange Gemini. Gemini founders, the Winklevoss twins, claimed that Silbert owed Genesis $1.675 billion, and a part of this dept belonged to Gemini’s Earn program users.

Even though Silbert replied to the twins and said that the DCG didn’t have any outstanding debt to Genesis, the twins refused to accept and asked Silbert to stop pretending as if he and the DCG were “innocent bystanders and had nothing to do with creating this mess.”