Crypto Giant DCG Is Now Being Investigated By SEC & DOJ• January 10, 2023 10:52 am • Comments
The crypto giant Digital Currency Group (DCG) is now being investigated by both the SEC and the Department of Justice.
Whether or not this will have any impact on the crypto markets is still to be determined, but it does solidify the SEC’s reputation of doing regulation by litigation which has negatively impacted the growth of the crypto industry.
The SEC and DOJ are investigating the internal transfers that have been done between DCG and its subsidiary lending firm Genesis Global Capital.
The reason why they may be doing this is probably because of suspicion of Genesis as it is one of the companies that were impact by the FTX collapse.
Genesis had halted withdrawals for customers and had a significant amount of crypto that has been held by FTX so authorities are likely inquiring if these internal transfers involved customer funds.
The SEC and Eastern District of New York are investigating into money flow between DCG and Genesis. $GBTC pic.twitter.com/nHsu8zHMOb
— Dylan LeClair 🟠 (@DylanLeClair_) January 7, 2023
As of yet, no indictment has been brought against DCG, nor has either U.S. agency provided any information about the case. A spokesperson for DCG said the company was unaware of aninvestigation:
“DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG.”
Genesis is one of the companies affected by the contagious wave following the collapse of FTX in November.
According to the firm’s disclosure on Nov. 10, it has $175 million locked up in an FTX trading account.
Genesis halted withdrawals on Nov. 16 due to liquidity issues and has engaged with investment bank Moelis & Company to assist with restructuring.
With that being said, even if this investigation was completed, it is clear for speculators and investors that the SEC’s actions have already failed to protect investors.
After all, funds have already been lost due to the FTX collapse and the SEC had taken action on this much too late to be able to make any difference.
The collapse of FTX also creates a domino effect where firms like Genesis is affected which will likely add additional damage that the SEC had failed to prevent.
The best course of action would be for the regulatory agencies involved to rethink how they enforce regulations and also laying out clear regulations that actually protect all investors.
As of right now, many within the crypto community believe that the SEC is not serving their best interests and is thus hindering the growth of the market.
“Crypto Conglomerate #DCG Being Investigated by DOJ, SEC: Report” https://t.co/vEIeFmMTiB
— Simon Dixon (@SimonDixonTwitt) January 8, 2023
In addition to Genesis Global Capital, the company also owns other subsidiaries, including Grayscale Investments – a major digital asset manager that holds over 600 BTC tokens, CoinDesk media publication, popular Bitcoin mining service Foundry, and Luno, a cryptocurrency exchange with over 10 million customers.
If the current investigations into DCG by the U.S. authorities reveal any information that causes a negative sentiment around the conglomerate and its subsidiaries, the ripple effect could be quite catastrophic for the entire crypto market.
However, there is currently no indication of such happening, and investors may remain calm pending the release of any further information on the investigations.
"Genesis Owner DCG Faces SEC, DOJ Probes: Report
The investigations have not yet been publicly confirmed, but one predates the collapse of FTX." https://t.co/zKvt6dX6HZ
— Zero Shorts (@zeroshorts) January 9, 2023
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