The bankruptcy court presiding over the FTX Trading bankruptcy last month issued a memorandum opinion addressing valuation of cryptocurrency-based claims and how to “calculate a reasonable discount to be applied to the Petition Date market price” for certain cryptocurrency tokens.

Many litigators and corporate lawyers view the practice of representing a large shareholder and the company in which it is invested as common practice. In many instances, no conflict of interest will ever materialize such that the shareholder and the company require separate representation. However, in a recent opinion rendered by the United States Bankruptcy Court, Eastern District of Virginia (the “Court”), a large international law firm (the “Firm”) was disqualified from representing Enviva Inc.

Who owns cryptocurrency held by a cryptocurrency exchange? Do the cryptocurrency assets belong to the customers who deposited the crypto with the exchange, or do the cryptocurrency assets belong to the exchange itself? The answer to this question will have huge significance, both in terms of creditor recoveries as well as preferential transfer liability exposure.

While gaining recognition of Canadian insolvency proceedings south of the border used to be wishful thinking for an insolvent Canadian entity having involvement in the cannabis industry, such proceedings are now seemingly becoming a potential option. The United States Bankruptcy Court Central District of California Los Angeles Division (the “Court”) recently dismissed the United States Trustee’s (the “Trustee”) second motion to dismiss in The Hacienda Company, LLC’s (“THC”) bankruptcy proceedings.

Introduction

A few weeks ago, real estate practitioners, investors, speculators, lenders and aspiring homeowners were all surprised to learn that The One, a monster development at 1 Bloor St. West in Toronto, was being placed into receivership. The project undertaken by Sam Mizrahi and his company, Mizrahi Inc., is slated to be an 85-storey mixed-use residential tower in the heart of the city, comprising retail stores, a restaurant, a hotel and luxury residential suites. It would be an iconic addition to Toronto’s growing skyline…

In this second part of our blog exploring the various issues courts need to address in applying the Bankruptcy Code to cryptocurrency, we expand upon our roadmap.

Many authorities and commentators have considered cryptocurrencies, and the blockchains that undergird them, as a potentially disruptive force in the financial industry. Now, that disruption has made its way to a different side of finance—bankruptcy, and during the past year, the United States bankruptcy courts have had to confront many unexpected challenges involved in dealing with cryptocurrency.

A recent Canadian insolvency filing could provide insight into how U.S. courts will approach Chapter 15 applications from foreign cannabis-related entities.

How close is too close? The answer to this question can have dire implications for people and companies involved in the cannabis industry who wish to seek bankruptcy protection.

There may be hope on the horizon for insolvent Canadian cannabis companies who wish to seek recognition proceedings south of the border.