Eternity Law International News Cryptocurrency and Bankruptcy

Cryptocurrency and Bankruptcy

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

Forex Brokerage License in Seychelles

If you plan to operate in financial markets and offer FX brokerage services to clients from regulated jurisdictions, you must apply for a Forex broker license, and Seychelles, definitely, suits well to get it. This license is required for all brokerage firms, mutual and hedge funds. Reasons for choosing an offshore jurisdiction Authorities in both...

Operations of a Cryptocurrency Exchange Company in Portugal

Financial technologies and virtual currencies particularly are hot subject matters in the FinTech sector among the Portuguese regulative bodies. In the past years, these state-of-the-art instruments have become a mainstream trend due to the growing value of the world’s first decentralized cryptocoin – Bitcoin, the influx of ICOs across the globe, and their market cap...

Restoration of Ukrainian citizenship

On the basis of the Law “About Citizenship” Article 10, restoration of civil relations with Ukraine is carried out when: a person who has withdrawn from the legal position. Who does not have any other citizenship, submits an application for restoration. Then he becomes a citizen of Ukraine, even if he is not within the...

Blind trust

WHAT IS A BLIND TRUST AND HOW DOES IT WORK? A “blind trust” is a fiduciary agreement in which the beneficiary of the trust is not allowed to control, manage, or even know about the assets within the trust. In such cases, the designated trustee has complete freedom to manage the blind trust. It is...

Currency exchange business in Europe 

When a person sends some monetary means outside his/her state, exchange organizations convert funds into local currency. Currency exchange offices attract private investors only because changing monies is a profitable commercial niche. Such organizations earn on exchange rate differences. Sometimes, at the request of the owner, a commission fee may be established. The course is...

Crypto license in Latvia

By establishing a firm and getting a crypto-license in Latvia, you open doors to offering services for crypto-exchange and storage of cryptoassets within provisions of law basis of the European Union and other countries. Our professional experts have already helped hundreds of clients successfully obtain permits to work with crypto-currencies in Latvia and others; it...
Fill the blank:


Dreikonigstrasse, 31A, Stockerhof


Baseina street, 7


Grosvenor Gardens, 52


1629 K St. Suite 300 N.W.


Gediminas Avenue, 44A


Kesklinna linnaosa, Tuukri 19


Lochrin Square, 1


Jacovides Tower, 5 floor


Esplanade, 7 floor

Hong Kong

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


Level 42, Suntec Tower Three, 8 Temasek Boulevard


20 Martin Place


2609 Avenida da Boavista


Revaz Tabukashvili Str., N 45, area N 7