NYAG Investigates Barry Silbert’s DCG Over Ties With Genesis

• Barry Silbert’s Digital Currency Group is undergoing scrutiny by the New York Attorney General.
• The regulator is investigating the DCG over its dealings with Genesis Global Capital.
• Details of the investigation include a probe involving Genesis’ past chief risk officer, Michael Patchen.

According to reports, Barry Silbert’s Digital Currency Group (DCG) is undergoing scrutiny by the New York Attorney General (NYAG). The regulator is investigating the DCG over its dealings with Genesis Global Capital, a subsidiary of the parent company. Details of the investigation include a probe involving Genesis’ past chief risk officer, Michael Patchen, who left the firm in October 2022.

The latest report follows the initial scrutiny the DCG faced last January by the Eastern District of New York. The probe involved the United States Department of Justice (DoJ) and the Securities and Exchange Commission (SEC). 

There has been no official announcement of the probe by the NYAG, and the DCG has not confirmed if there are ongoing investigations. However, the firm said it is working with regulators and investigators on request.

DCG faced probes in January over internal transfers between the company and Genesis. The transfers investigated include $575 million the DCG received as loans from Genesis, and obtaining a $1.1 billion promissory note from the subsidiary after taking on Genesis’ liabilities. In a November shareholders’ letter, Silbert stated that the DCG took on Genesis’ liabilities after the collapse of Three Arrows Capital.

Details of the latest probe by NYAG are not clear. However, crypto community members think it is linked to the previous investigation, even though engagements linking DCG and Genesis extend beyond internal transfers.

Days after the January investigations, the SEC charged Genesis and its partner, Gemini over offering an interest-bearing service that is now defunct to investors. The SEC noted it had expected the pair to adopt internal corporate transfers, instead of the said service. The failure of the service has led to DCG facing a separate lawsuit from the SEC.