Venture capital firm Digital Currency Group (DCG) is facing a fresh probe from the office of the New York Attorney General over its ties with bankrupt crypto lender Genesis, a report from Bloomberg confirmed, citing people familiar with the investigation.
People familiar with the inquiry, who requested not to be revealed due to the secrecy of the probe, stated that NY Attorney General Letitia James had asked Genesis’s former executives to provide certain information concerning the defunct crypto lending firm and DCG subsidiary. One of the people familiar with the probe also confirmed that ex Genesis’ chief risk officer, Michael Patchen, was also questioned in the ongoing investigation.
More Investigator Influx
The NY AG Letitia James’s office joins a long list of prosecutors already investigating the case involving Genesis and its parent company, DCG. The Securities and Exchange Commission (SEC) and Brooklyn’s federal prosecutors are already looking into the situation.
What particularly interests these investigators is the promissory note, worth $1.1 billion, which DCG’s CEO Barry Silbert mentioned in a letter to shareholders in November. Silbert stated that the venture capital firm issued the IOU to Genesis to help pay creditors and prevent a takeover.
Genesis filed for bankruptcy earlier this year after the crypto lender could no longer cope with its exposure to Three Arrows Capital (3AC) and FTX’s implosion. Among other debtors, its parent company, DCG, also borrowed $575 million from the crypto lenders before the bankruptcy.
DCG Cooperating With Investigators
When queried about the development, DCG’s spokesperson stated that the company is cooperating with investigators and assisting them on request.
“DCG has always conducted its business lawfully and with the highest ethical standards,” the spokesperson noted.
Silbert had earlier stated that DCG’s relationship with Genesis was strictly business-oriented and “always structured on an arm’s length basis and priced at prevailing market interest rates.”
