Crypto bankruptcy (creditor claims)

When a custodial platform fails, customers usually stop being owners of coins and become creditors. They file claims, an administrator or trustee gathers the remaining assets, sells or distributes them and courts decide who ranks first. A key question is whether deposits were held in trust for customers or became property of the company under its terms of service; in the Celsius case, a US judge ruled that assets in its Earn accounts belonged to the bankrupt estate.

High-profile cases set the reference points. Mt. Gox creditors waited about a decade for repayments in bitcoin. FTX customers were repaid in cash based on the dollar value of their holdings on the date of the bankruptcy filing, which meant missing much of the later price rise. Estates also pursue clawbacks, suing to recover withdrawals made shortly before the collapse or payments to insiders.

Recovery rates and timelines vary greatly by jurisdiction and case. Claims can be sold to specialised buyers at a discount, a market that often attracts phishing aimed at creditors. Segregation rules introduced after 2022 aim to keep customer assets outside the estate in future failures.