- Attorney General James is examining the transaction of the crypto lender and its parent company.
- The state-federal prosecutors and the SEC are conducting the probe.
The New York Attorney General’s (AG) office is reportedly investigating the parent company of the collapsed crypto lender, Genesis Global Capital. The AG examines the dealings of the Digital Currency Group (DCG) and Genesis before the latter’s collapse. Bloomberg reported citing two people familiar with the matter.
According to the information shared with the media publication, Attorney General James has requested information from the executives of Genesis, including the former Chief Risk Officer, Michael Patchen. The federal prosecutors in Brooklyn and the Securities and Exchange Commission are conducting the investigations.
In January, Genesis filed for bankruptcy protection in the US, then owing creditors more than US$3B. The collapse of the crypto lender was exacerbated by the fall of FTX and Three Arrows Capital (3AC). Genesis’ collapse also led to a legal tussle between the platform and the Gemini cryptocurrency exchange.
New York Probes Genesis Transactions
In particular, the attorney general examines the transactions between Genesis and DCG. Last year, the Group disclosed receiving $575 million in loans from Genesis. Additionally, the probe covers a promissory note that DCG’s founder and CEO Barry Silbert said resulted from the company assuming the liabilities of Genesis following the collapse of 3AC.
The investigations from the AG’s office arrived at a time the top law enforcement agency is stamping its authority on digital assets. James has brought similar lawsuits against several digital asset companies, including KuCoin, BlockFi, and Celsius, for allegedly offering unregistered securities.
Additionally, in May, James proposed legislation seeking to tighten the regulations of the digital asset sector. If adopted by lawmakers, the legislation is expected to protect investors, consumers, and the broader economy.
James commented on the proposal: “Rampant fraud and dysfunction have become the hallmark of cryptocurrency and it is time to bring law and order to the multi-billion dollar industry. New York investors should have the peace of mind that there are safeguards in place to protect them and their money.”
Affiliate link — we may earn a commission.