The Moscow bankruptcy court has ordered a bankrupt debtor to provide information about his cryptocurrency holdings. The trustee has requested that his cryptocurrencies be included in the bankruptcy estate. The court will decide if the coins can be used to pay creditors.
Court Orders Debtor to Provide Crypto Details
The Moscow Arbitration Court has ordered Russian citizen Ilya Tsarkov, who has been declared bankrupt, to provide information about his cryptocurrency holdings, RIA Novosti reported from the courtroom. The appointed trustee for the case, Aleksey Leonov, told Rapsi, as translated by Crime Russia:
This is the first recorded attempt to view cryptocurrency as [part of a]bankruptcy estate.
Tsarkov was declared bankrupt in October of last year. The court found that his assets and salary were not enough to pay off the debt of 19 million rubles (~USD$333,000) to Rikas Investment Group.
Citing that Tsarkov had revealed his possession of an online wallet at Blockchain.info, “Leonov demanded that the funds in the debtor’s wallet be included in the bankruptcy estate and Tsarkov be obliged to provide him with the password,” the news outlet elaborated.
Judge Larisa Kravchuk ordered Tsarkov to disclose the balance of his cryptocurrency holdings by February 26 when the court will reconvene and decide whether his cryptocurrencies can be used to settle with creditors.
Should Cryptocurrency Be Included in a Bankruptcy?
Tsarkov’s representative argued that cryptocurrencies “are not recognized by the state and thus, they could not be considered as property,” comparing it to quasi-currency used in some computer games, Ria Novosti described. Tsarkov also asserted that crypto transactions are between two parties and “Cryptocurrency has value only for those two people who are [ex]changing them.”
Nonetheless, Leonov maintained:
If the court refused to include the cryptocurrency in the bankruptcy estate, this would enable some debtors to ‘hide their property in bitcoin.’
Currently, “According to clauses 1 and 3 of Article 213.25 of the Law on Insolvency, all property of a citizen available as of the date of the decision of the Arbitration Court to declare him bankrupt,” and any assets acquired after that date, “constitute the bankruptcy estate, with the exception of property that cannot be recovered in accordance with the law,” the trustee was quoted by the news outlet. He explained:
The law contains a closed list of assets that cannot be levied on execution documents, and bitcoin and ethereum cryptocurrencies, including those contained in online wallets, are not included [on]this list.
Do you think cryptocurrency should be included in the bankruptcy estate? Let us know in the comments section below.
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Author: Kevin Helms