On May 8, 2023, online cryptocurrency exchange platform Bittrex, Inc. and three of its affiliated entities (collectively “Bittrex”) filed for chapter 11 to wind down their U.S. and long-dormant Malta operations. The bankruptcy filing followed costly regulatory investigations and an April 17, 2023 SEC enforcement action alleging that Bittrex improperly sold crypto assets that were securities. Unlike other crypto bankruptcies, Bittrex did not risk, hypothecate, or loan cryptocurrencies needed to meet its contractual obligations to its customers.
On May 8, cryptocurrency platform Bittrex filed for chapter 11 in Delaware. Bittrex’s first day filings emphasize that, unlike many other crypto filings over the past year, this case is not a “free fall” bankruptcy. In fact, a plan has already been filed, and the first day declaration said the debtors “took extensive action pre-petition to ensure full customer recovery, and plan to swiftly bring these chapter 11 cases to a responsible conclusion.”
From television commercials to naming rights for arenas, the topic of cryptocurrency has been hard to avoid. While cryptocurrency may be virtual, its creation or ’mining’ occurs in the real world. This mining poses a credit risk for utility companies, given the incredible amount of electricity required to operate a “mining” facility. For example, crypto mining company Core Scientific, Inc. and its related companies, recently filed Chapter 11 bankruptcy cases where they reported their average monthly utility bills were more than $24.5 million dollars.
The Society of Trust and Estate Practitioners (STEP) held its annual International Wealth Structuring Forum in the Cayman Islands on 19 and 20 January 2023 at the Ritz-Carlton, Grand Cayman. The forum was an opportunity for leading trust and wealth management professionals to gather and discuss the latest local and international developments impacting the industry. Hector Robinson KC and James Anson-Holland of Mourant attended the forum and have summarised the top three takeaways from the panel discussions.
The mercurial modern assets
Adopting the analysis of the United Kingdom Jurisdictional Task Force ('UKJT") on the proprietary status of crypto currencies, a recent decision of the English High Court, AA v Persons Unknown, has found that crypto assets such as Bitcoin are "property" and therefore capable of being the subject of a proprietary injunction or freezing order.
The market for crypto assets has recently experienced significant tumult as evidenced by the bankruptcy filings of several key crypto players, including Three Arrows Capital, Voyager Digital, Celsius Networks, FTX and, most recently, BlockFi. These bankruptcy cases give rise to numerous issues for investors holding crypto assets, which can be mitigated with proper diligence and planning. In addition, there are several estate planning and trust-specific considerations that should be addressed when holding crypto assets (or determining whether to invest in crypto assets).
Just weeks after the “implosion” of cryptocurrency exchange FTX, credit services provider BlockFi filed for Chapter 11 protection with the United States Bankruptcy Court for the District of New Jersey, indicating that it is burdened with billions of dollars of estimated liabilities and more than 100,000 creditors.
The market for crypto assets has recently experienced significant tumult as evidenced by the bankruptcy filings of several significant crypto players, including Three Arrows Capital, Voyager Digital, Celsius Networks, FTX and, most recently, BlockFi. These bankruptcy cases give rise to numerous issues for investors holding crypto assets, which can be mitigated with proper diligence and planning. In addition, there are several estate planning and trust-specific considerations that should be addressed when holding crypto assets (or determining whether to invest in crypto assets).
We recently had a chance to speak to The Independent and
There has been no shortage of high-profile insolvencies in the crypto market in recent months across a range of market participants and geographies. These include the US Chapter 11 and Bahamas provisional liquidation of FTX as well as the US Chapter 11 filings of BlockFi, Singapore-based crypto hedge fund ThreeArrows Capital, US-based lenders Celsius Network and Voyager Digital, US-based crypto mining data centre Compute North and German crypto bank Nuri.