FTX Collapse: Barry Silbert’s Crypto Empire Is In the Crosshairs of Regulators

The bankruptcy of Sam Bankman-Fried’s crypto empire continues to cause waves in the crypto space. 

The various firms continue to monitor each other to find out who will be the next collateral victims of this disaster after the lender BlockFi went down.

All eyes have been on lender Genesis, a subsidiary of crypto juggernaut Digital Currency Group, aka DCG. Last November, the brokerage stopped customers from making withdrawals and issuing new loans as a result of the bankruptcy of FTX. The division that has halted the withdrawals is Genesis Global Capital, which works with institutional clients and had $2.8 billion in total active loans as of the end of the third quarter.

The company had funds locked in its FTX trading account. 

Genesis is also closely watched by regulators. According to Bloomberg News, the Department of Justice and the Security and Exchange Commission are conducting separate investigations into the parent company of the lender and the relationship between the two firms.

Relations Between DCG and Genesis

Federal prosecutors are, for example, closely examining the transfers of funds between DCG and Genesis. They also want to determine what was told to investors about the transactions between the two companies. 

This is similar to the interest of the investigators in the incestuous relations between FTX and its sister company Alameda Research, a hedge fund which was also a trading platform for institutional investors. The fall of the Bankman-Fried empire showed that funds from FTX clients had been loaned to Alameda, amounting to approximately $10 billion. However, the two companies were supposed to be independent even if they shared the same founder.

Federal investigators have requested documents from DCG and Genesis. Both investigations are still in the initial stages and no allegations have yet been made against Digital Currency Group or Genesis. 

“While we do not comment on specific legal or regulatory matters, Genesis maintains regular dialogue and cooperates with relevant regulators and authorities when it receives inquiries,” a…

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