Frankfurt sporting director Timmo Hardung said the player was misheard.
"Our entire NLZ is like Eintracht Frankfurt, multicultural and we have clear values that we live by and constantly demand," Hardung told BILD.
"Racism has no place here, but we still take such an accusation seriously. After consultation, our player confirmed that he had used the word 'digga', which is common in youth slang, in the course of a normal game. We have no doubt that this statement is correct."
'Digga' is a slang term that means 'bro' or 'dude'.
Hardung added: "We can rule out racism, it is a linguistic issue and we therefore hope that we have also cleared up the misunderstanding with the players concerned and those responsible at Liverpool FC."