State securities regulators are reportedly investigating Genesis Global Capital as part of a broad investigation into “the interconnectedness of crypto firms,” Barron’s reported on Friday. The report notes that the Alabama Securities Commission is investigating whether or not cryptocurrency companies have violated securities laws without filing proper records.
Report Says Financial Regulators Are Investigating Genesis Global Capital and the Interconnected Activities of Other Crypto Firms
The focus has been on Genesis Global Capital and its lending operations since Genesis announced on November 16, 2022 that it was temporarily suspending withdrawals and new lending. A few days later, The New York Times (NYT) reported that Genesis Global Capital had hired a restructuring adviser. The NYT report detailed that Genesis “has hired investment bank Moelis & Company to explore options, including potential bankruptcy, three people familiar with the situation said.”
However, reports by The Block and The Wall Street Journal shared a letter written by Barry Silbert, the CEO of Genesis’ parent company, Digital Currency Group (DCG). Silbert’s letter reassures DCG shareholders that his company “will continue to be one of the industry’s leading builders.” Silbert referred to Genesis in the shareholder letter and he stressed that it is important to note that the Genesis lending arm had “no impact on Genesis’ cash and derivatives trading or custody activities, which continue to operate as usual”.
On Friday, Barron author Joe Light reported on Genesis Global Capital and the report claims that state securities regulators are involved in an alleged investigation into Genesis. Light cited the Alabama Securities Commission and its director Joseph Borg as one of the states examining the alleged “crypto business interdependence.”
Light’s report says the apparent investigation involves agencies in “several other states,” but as far as other crypto firms go, only Genesis was mentioned. “Borg declined to name the other companies,” the Barron’s author detailed. The report further claims that the general purpose of the investigation is “whether Genesis and other companies tricked residents into investing in crypto-related securities without making proper records.”
State securities regulators in the United States have been cracking down and investigating crypto companies for some time. Specific state regulators have filed lawsuits against a number of cryptocurrency companies such as Celsius, Blockfi, Nexo, and FTX. The complaints from securities regulators are all very similar, as they question whether or not crypto firms sell unregistered securities to retail investors.
What do you think of the report that says there is an alleged investigation into the interdependence of Genesis and the crypto company? Let us know what you think about this topic in the comments section below.
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