The Supreme Court’s recent decision in Merit Mgmt. Group, LP v. FTI Consulting, Inc., 138 S.Ct. 883 (2018), held that transfers made by and to entities that are not “financial institutions” or other covered entities fall outside of the scope of the § 546(e) safe harbor even if they are made through financial institutions or other covered entities. The Supreme Court’s decision resolves a circuit split over how the § 546(e) safe harbor applies to transactions involving conduit entities and could impact future disputes involving safe harbors under the Bankruptcy Code.

The Supreme Court’s recent decision in Merit Management Group, LP v. FTI Consulting, Inc., 138 S.Ct. 883 (2018), held that transfers made by or to entities that are not “financial institutions” or other covered entities fall outside the scope of 11 U.S.C. § 546(e)’s “safe harbor” from a trustee’s avoidance powers under the Bankruptcy Code, even if those transfers are made through financial institutions or other covered entities.

The confusion over Bitcoin grows in the latest lawsuit brought in a California bankruptcy court by Trustee Mark Kasolas against Marc Lowe, a former employee of HashFast Technologies LLC.

The trustee alleges, among other things, that Lowe received from the bankrupt Bitcoin mining company fraudulent transfers which included 3,000 Bitcoin (“BTC”) in September 2013, valued at approximately $363,861.