The Federal Bureau of Investigation (FBI) and other U.S. regulatory bodies are investigating the financial undertakings of the Digital Currency Group (DCG) and its subsidiary, Genesis Global Capital, amid escalating concerns regarding financial misconduct within the corporation.
Cameron Winklevoss recently met with federal officials, including agents from the FBI, representatives from the Securities and Exchange Commission (SEC), and prosecutors from New York City to explore the allegations he levied against Barry Silbert, the CEO of DCG, as reported by Bloomberg News.
Winklevoss, a prominent figure in the crypto sector, accuses Silbert and DCG of propagating false information concerning Genesis Global Capital’s financial standing. The subsidiary, which is embroiled in bankruptcy procedures initiated this January, is allegedly involved in the dissemination of misleading financial details.
Gemini, a key creditor to the beleaguered firm, has instituted legal proceedings against Silbert and the crypto giant DCG. The lawsuit revolves around the claim that Silbert deliberately misrepresented the fiscal health of Genesis to encourage investors to continue participating in the Gemini Earn program, despite being aware of significant financial discrepancies.
Genesis currently owes a staggering sum exceeding $3.5 billion to its principal 50 creditors, with Gemini’s clients slated to receive a considerable chunk of this amount, approximately $766 million, as delineated in the January Chapter 11 bankruptcy documents.
A focal point of the ongoing federal investigation is a $1.1 billion promissory note issued by DCG to Genesis following the collapse of Three Arrows Capital (3AC). Authorities are meticulously examining the accuracy of the information Silbert communicated to investors regarding this transaction.
Simultaneously, federal prosecutors and regulatory agencies are engaging with both former and current Genesis executives, including its previous CEO Michael Moro, to gather comprehensive insights into the case. New York Attorney General Letitia James is also spearheading a separate investigation into DCG’s operations, requesting interviews with these executives.
Gemini’s litigation against DCG underscores that the crypto exchange was induced to maintain its association with the lending program under false pretenses, with the Winklevoss-led entity highlighting a noticeable shortfall in Genesis’ financial records, primarily attributed to the 3AC debacle the year before.
Responding to these grave allegations, DCG has recently initiated legal maneuvers to have the lawsuit dismissed, vehemently rejecting the claims presented in Gemini’s July 7 filing.
