Embattled crypto group DCG is reportedly under investigation by US prosecutors over money transfers at lending arm Genesis

• Crypto giant Digital Currency Group is under investigation by the SEC and DOJ, according to Bloomberg.
• The probe examines money flows between DCG and Genesis' troubled lending arm.

Crypto conglomerate Digital Currency Group is under investigation by US prosecutors over money transfers at its brokerage subsidiary Genesis, Bloomberg has reported.

The Securities and Exchange Commission and the US Department of Justice's Eastern District of New York office are looking into financial transfers between DCG and Genesis' crypto-lending unit, called Genesis Global Capital, it said.

The US authorities are also probing what investors were told about those transactions, Bloomberg said in its report late Friday, citing people familiar with the matter.

The crypto group, which said last week its borrowing and lending business needs more time to sort out its rocky financial situation, defended its practices and said it wasn't aware of any New York probe.

"DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG," the company told Bloomberg.

Pressure is piling up on DCG following the implosion of Sam Bankman-Fried's FTX crypto empire. The Genesis parent closed down its wealth management unit last week, citing a "crypto winter" and significant headwinds to the industry.

But in November, Genesis Global Capital halted customer withdrawals after FTX's collapse triggered a flood of outflows, draining the firm's liquidity. Genesis' derivatives business had $175 million locked in FTX trading accounts.

Brokerage Genesis also faces major losses as a result of loans it made to Three Arrows Capital, and it has filed a claim for $1.2 billion against the failed crypto hedge fund, Coindesk reported in July.

Amid the liquidity issues and citing "unprecedented industry challenges," Genesis last week slashed 30% of its workforce in another round of staff cuts.

Meanwhile, DCG is embroiled in a public battle with crypto platform Gemini after its co-founder Cameron Winklevoss said the crypto giant owes its customers nearly $1 billion. Winklevoss accused DCG's CEO Barry Silbert of stalling on working out a way to pay back customers of Gemini's Earn interest-bearing account program.

DCG and the US authorities did not respond to Insider's request for comment.