Eternity Law International News Cryptocurrency and Bankruptcy

Cryptocurrency and Bankruptcy

Published:
October 17, 2022

Despite being a relatively new phenomenon, cryptocurrencies are already fraught with problems. One area where new and complicated problems about assets, liabilities and contractual responsibilities concerning digital money are raised is bankruptcy. Topic “Bankruptcy And Crypto” is very important and relevant. Thus, In this article we overview dealing with cryptocurrency in a bankrupt estate.

Do you have to declare your bitcoin holdings when filing for bankruptcy?

There isn’t much case law on the subject of crypto, but it is unmistakably an asset that needs to be reported. Everything of a debtor’s property must be revealed in a bankruptcy proceeding.

The most pertinent question about disclosure concerns whether or not a trustee may find bitcoin if a debtor does not declare it as an asset and fails to notify his or her counsel. Given that bitcoin is seldom a common asset and that many people might not be aware that it qualifies as an asset that requires disclosure, such non-disclosure could be harmless enough. Of course, deliberate withholding of information might result in legal action.

It might be difficult to take possession of crypto assets and extract value from them. Crypto holder is assumed the administrator of the crypto stored in the e-wallet. Trustees or another bankruptcy expert will thus need the debtor’s help in getting the access to realize any crypto assets housed in the virtual wallet; otherwise, they will not have enough authority over or accessibility to the crypto assets to be able to do so.

Crypto definition

Such digital currency possesses traits common to many assets. First of all, since it resembles cash in certain ways, bitcoin might be categorized as money. It is tradable for goods and services. Nowadays there are even nations that accept tokens as legal cash.

Numerous aspects of cryptocurrency are similar to those of usual assets. Despite the fact that cryptocurrency is commonly traded on the exchange market, neither standard stock exchanges nor any governance recognizes it as a financial or negotiable instrument.

Cryptocurrency has a potential worth that recommends being revealed despite the uncertainties. It is ought to at minimum be listed as an “other asset” in a debtor’s asset schedule.

How to estimate the worth of a holding of cryptocurrencies

The most challenging cryptocurrency-related issue may be valuation. Even if the debtor categorizes and identifies the asset correctly, how is it rated? The ability to exclude all or any of the cryptocurrencies may depend on valuation. Regardless, there isn’t a distinct market, and prices are prone to extreme swings. Any trustee considering a cryptocurrency would probably want aid in comprehending the software for that coin and accessibility to the exchange where that operate cryptos.

If you have issues with cryptocurrency company bankruptcies, our team of specialists can consult you, just contact us.

Criminal cryptocurrency exchanges

Transfers of virtual assets 2 years after a bankruptcy filing might be considered fraudulent, just like transfers of any other asset, if the essential conditions are met. Such a transfer happens when a debtor, whether willingly or involuntarily, does so with the genuine intention of impeding, delaying, or defrauding any organization to whom the debtor owes money.

Please contact us to get more information.

You can see our current offers in the categories “Cryptocoins and licensing of cryptocurrency operations”, “Ready-made companies”, “Banks for sale” and “Licenses for sale”.

You could be interested

Offshore Forex Licensing 2022: How to Choose

Prior to briefly describing the existing options for registering a company with forex trader license, we would like to give a few examples of questions that a future forex broker needs to get answered before making a final decision regarding the initiation of choosing offshore forex licensing. What geographical region will the company’s forex broker...

Registration of companies around the world, tax optimization, construction of tax schemes.

Registration of companies around the world, tax optimization, construction of tax schemes.

Regulating the risks related to crypto-assets

Reaching a provisional approval on the scope and direction of the MiCA proposal, the EU has brought virtual assets and VASPs under a common regulative system. These legal mechanisms that focus on regulating the risks related to crypto-assets, will guarantee the security of crypto holders and safeguard the smooth operation of the crypto market, whilst...

Company registration in Monaco

Registering an organization in Monaco means getting access to a variety of opportunities, including a residence permit. This jurisdiction has the following advantages: since Monaco is one of the financial centers of the eurozone, business will be reliably protected, and customer information will be completely confidential; favorable fiscal structure. The first three annual periods of...

Implementation of a global taxation reform in Switzerland

The Swiss government has pledged to enter into force the minimum taxation rate for a number of companies from 2024 concerted by the Organization for Economic Co-operation and Development and G20 member states. The decision was approved by the Federal Council during its meeting on 12 January 2022. Under the OECD/G20 BEPS Project, the new...

Asset management license in Belgium

Jurisdiction, located at EU center, is renowned for its strategic geographical location, extensive transport network and diverse industrial and commercial base. Registering a firm locally brings a number of benefits to foreign investors, such as research and development (R&D) support, innovation and close links with neighboring markets. Establishing a company in the country is quite...
Fill the blank:

Zurich

Dreikonigstrasse, 31A, Stockerhof

Kyiv

Baseina street, 7

London

Grosvenor Gardens, 52

Washington

1629 K St. Suite 300 N.W.

Vilnius

Gediminas Avenue, 44A

Tallinn

Kesklinna linnaosa, Tuukri 19

Edinburgh

Lochrin Square, 1

Nicosia

Jacovides Tower, 5 floor

Riga

Esplanade, 7 floor

Hong Kong

18 Harbour Road, 35/F, Central Plaza, Wanchai

Singapore

Level 42, Suntec Tower Three, 8 Temasek Boulevard

Sydney

20 Martin Place

Porto

2609 Avenida da Boavista

Tbilisi

Revaz Tabukashvili Str., N 45, area N 7