Crypto Lender Genesis Prepares to Liquidate Without Deal With Parent Company
The move comes after New York’s attorney general filed a lawsuit against Genesis and parent Digital Currency Group
2 min
Crypto lender Genesis Global is pursuing a chapter 11 liquidation plan that abandons a previous settlement proposal to restructure the $1.7 billion in loans it extended to its parent company Digital Currency Group.
Genesis filed court papers Wednesday for a plan to exit from chapter 11 without a resolution of its claims against DCG, the crypto conglomerate founded by finance veteran Barry Silbert. Genesis is now preparing to liquidate its assets without the settlement proposal reached in August that intended to deliver estimated recoveries of between 70% to 90% for Genesis customers, including users of crypto exchange Gemini Trust’s Earn program.
The settlement proposal didn’t get the support of key stakeholders, notably Gemini and its founders, the Winklevoss brothers, and the parties had been in continuing negotiations. Ultimately, Genesis was unable to reach an agreement with DCG on final debt terms, Genesis said in filings with the U.S. Bankruptcy Court in New York.
And last week, New York Attorney General Letitia James filed a lawsuit against Gemini Trust, Genesis and DCG for allegedly defrauding more than 230,000 investors of more than $1 billion. In light of the lawsuit, Genesis and the official committee representing its customers determined that a settlement with DCG isn’t a viable route, Genesis said in the filings.
A Genesis spokesperson said the lawsuit’s claims against the company have no basis, and it has been cooperating with all authorities.
A DCG spokesperson last week said the firm was blindsided by the lawsuit because it cooperated with the attorney general’s investigation. Gemini last week said it disagreed with being named in the lawsuit because the company and its Earn program investors are victims of fraud.
The attorney general’s lawsuit alleges that Gemini misled investors in the Earn program by failing to disclose its risks despite knowing that Genesis’s cryptocurrency loans were undercollateralized and heavily concentrated.
Under the new plan, Genesis customers can expect estimated recoveries of between 61% to 77%, pending court approval. Genesis filed for bankruptcy in January in the wake of the collapse of crypto exchange FTX.
The customers’ estimated recoveries under the new plan is smaller compared with a settlement with DCG that would have delivered more value upfront. Now, customers would have to wait for the outcome of litigation against DCG seeking to collect on its outstanding loans from Genesis.
A DCG spokesperson said in an email that the company remains committed to reaching a fair resolution for all parties, and that a resolution through litigation would result in far lesser recoveries for creditors. The spokesperson also said the company is “fully prepared to defend and win.”
The prior settlement was meant to restructure DCG’s debts to Genesis, including about $630 million in a past-due unsecured loan, and a $1.1 billion unsecured promissory note due in 2032.
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The Federal Budget may have softened some of its proposed tax reforms, but it has exposed a bigger issue: too many families are relying on wealth structures that no longer reflect the realities of modern life.
3 min
For many Australians, the 2026 Federal Budget initially felt like a direct challenge to the way wealth is created, held and transferred between generations.
The headlines were immediate: changes to capital gains tax, reforms to discretionary trusts, restrictions on negative gearing and increased scrutiny of investment structures. Unsurprisingly, affluent families, business owners and investors began asking the same question:
Is the way we hold our wealth still fit for purpose?
In recent days, the government has announced several significant amendments following industry consultation and public feedback, including exempting testamentary trusts from the proposed 30 per cent minimum tax and expanding capital gains tax concessions for small businesses.
The backdown is welcome. But it also highlights something much bigger.
This Budget has accelerated a conversation that many Australian families have been postponing for years.
The conversation is not really about tax. It is about wealth stewardship.
For decades, Australians have built wealth through businesses, property, investments and careful long-term planning. Yet many families have not revisited the legal structures surrounding those assets in years, sometimes decades.
We often see clients who have spent years building significant wealth, only to discover their legal arrangements no longer reflect their current circumstances.
Their children are now adults. They may own multiple properties.
They may have sold a business, entered a second marriage, become grandparents or accumulated digital assets that did not exist when their original estate plans were prepared.
The trust that distributes income may need to be reconsidered. The bucket company may no longer be so attractive.
The Budget has simply exposed a reality that already existed: wealth structures cannot remain static while life continues to evolve.
Importantly, trusts themselves are not the issue.
Trusts are legitimate planning tools that provide flexibility, protection and continuity. When used appropriately, they allow families to adapt to changing circumstances over time.
And neither is tax the issue, really. Getting the fundamentals right is more important for long-term, sustainable wealth than a few favourable tax treatments around the edges.
The real issue is complacency.
Too often, families create structures and assume the job is done. It isn’t.
Estate planning is no longer a document you sign once and file away in a drawer. It is an ongoing process that should evolve alongside your life.
We are also seeing a broader shift in how Australians define wealth itself. It is no longer just the family home and an investment portfolio.
Modern wealth includes businesses, digital assets, cryptocurrency, intellectual property, frequent flyer points and increasingly complex family arrangements.
At the same time, Australians are living longer than ever before, meaning wealth may need to support multiple generations simultaneously. This creates new responsibilities and new risks.
How do you help your children enter the property market without exposing family wealth to relationship breakdowns?
How do you structure wealth so that it remains a source of opportunity rather than future conflict?
These are the questions families should be asking now.
The recent debate surrounding testamentary trusts also serves as an important reminder that policy decisions can have unintended consequences for vulnerable Australians. It is encouraging that the government has listened to feedback and clarified its position.
But the lesson remains: the wealth landscape is changing.
Increasingly, governments, regulators and tax authorities are paying closer attention to how wealth is held and transferred. That means families cannot afford to adopt a “set-and-forget” approach to their structures.
The families who will be best placed for the future are not necessarily those with the greatest wealth.
They are the families with the greatest clarity. Clarity around ownership, succession and governance. And clarity around how wealth will transition from one generation to the next.
Ultimately, preserving wealth is not about avoiding change.
It is about preparing for it.
Because the greatest risk is not change itself.
It is losing the ability to respond to it.
Anthony Hunt is Co-Founder of Wealth Lawyers and former COO of Westpac Private Bank. He advises business owners, investors and affluent Australian families on wealth protection, succession planning and intergenerational wealth transfer
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