U.S. prosecutors and the Securities and Exchange Commission (SEC) have started to investigate cryptocurrency-focused conglomerate Digital Currency Group (DCG), Bloomberg reported on Saturday, citing unnamed sources.

See related article: Digital Currency Group shuts down wealth management unit: report

Fast facts

  • Federal prosecutors are scrutinizing transfers between DCG and a subsidiary and have started to request interviews and documents. The SEC is also starting an investigation related to the conglomerate, according to the report.
  • The probes are still in the early stages, and the authorities have not made any accusation of wrongdoing against the company or its executives.
  • Last week, DCG reportedly shut down its wealth management subsidiary called HQ.
  • DCG’s wholly-owned brokerage subsidiary, Genesis Global Trading, also announced a 30% staff reduction to keep afloat with 145 employees, adding on to a 20% layoff in August last year, according to a CoinDesk report on Friday.
  • Genesis and its parent firm, which also owns crypto asset manager Grayscale and mining firm Foundry, have been under the spotlight for their debt issues stemming from the Three Arrows Capital contagion of 2022.
  • Last week, Barry Silbert, the chief executive officer of DCG, got into a Twitter spat with Gemini co-founder Cameron Winklevoss over DCG’s alleged US$1.675 billion borrowing from its lending arm Genesis, which Winklevoss said had led to his users’ funds at Genesis frozen.
  • DCG did not immediately respond to Forkast’s requests for comment.

See related article: DCG’s Silbert, Gemini’s Winklevoss start Twitter spat over frozen funds, billion dollar loans