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New York attorney general investigates DCG’s Genesis ties

New York attorney general investigates DCG's Genesis ties

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TL;DR

  • New York’s Attorney General, Letitia James, is investigating the Digital Currency Group’s (DCG) dealings with its bankrupt subsidiary, Genesis Global Capital.
  • Former Genesis executives, including ex-Chief Risk Officer Michael Patchen, are being questioned.
  • The focus is on the $575 million loan DCG received from Genesis, and a controversial $1.1 billion promissory note.

The recent waves created by the cryptocurrency giant Digital Currency Group, famously known as DCG, have now hit the shores of New York’s justice system.

The Empire State’s top law enforcement officer, Attorney General Letitia James, has now thrown her hat into the ring, joining the ongoing investigations into DCG’s dealings with its subsidiary, Genesis Global Capital.

The groundwork of the investigation

On the receiving end of the Attorney General’s queries are the former executives of Genesis, the crypto lending venture that went bankrupt earlier this year.

An essential figure in the unfolding drama is Michael Patchen, former Chief Risk Officer at Genesis, who exited the company after a brief three-month stint. Patchen’s sudden departure in October 2022, coupled with his recent interrogation, is raising questions.

DCG and Genesis are already in the crosshairs of federal prosecutors in Brooklyn and the Securities and Exchange Commission.

The firms are facing tough questions regarding their business practices and financial stability following the crypto market downturn last year, and the subsequent downfall of Three Arrows Capital, a digital-assets hedge fund, and crypto exchange FTX.

Representatives from DCG have reiterated their commitment to the investigation, claiming to maintain the highest standards of ethical conduct. The future course of these investigations, however, remains veiled, with no clarity yet on whether they will culminate in any complaints.

DCG-Genesis dealings under the lens

DCG’s ties with its bankrupt subsidiary Genesis Global Capital have surfaced as a crucial focus of the investigation.

The crypto giant, previously valued at $10 billion, revealed last year that it received about $575 million in loans from Genesis. DCG’s founder and CEO, Barry Silbert, has discussed the existence of a $1.1 billion promissory note, which came about as the company took on liabilities from Genesis tied to the Three Arrows implosion.

The web of transactions between DCG and Genesis is now under close scrutiny by regulators. This particularly includes the contentious promissory note and how it was portrayed to investors.

As a defensive move, DCG has called upon the expertise of Seth DuCharme, a former federal prosecutor, to represent the company. Attorney General James, known for her proactive stance against crypto misconduct, has been advocating for tighter regulations in the industry.

She had previously proposed a new state law to increase oversight over cryptocurrency companies, and her involvement in the DCG-Genesis case could expedite the adoption of this law.

James’s vigorous pursuit of justice has seen her take on various crypto firms, leading to high-profile legal battles.

Her campaign against dubious crypto practices is certainly making waves in the industry, as she endeavors to establish transparency and accountability in the world of digital currencies.

With the investigation into DCG’s dealings with Genesis now in full swing, the coming months promise to be a decisive period in the quest for cryptocurrency regulation.

As the drama continues to unfold, all eyes are on New York’s Attorney General and DCG.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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