We all remember 2017 as the year when cryptocurrencies became an overnight rage with people investing billions of dollars in them. The remarkable volatility of the most popular cryptocurrency, Bitcoin, took it to towering heights, giving it a dollar value of almost $20,000. After remaining fairly stable for the first couple of months of 2019, it now stands at $11,000 and has shown drastic changes in its value lately.
In the world of cryptocurrencies, bankruptcy can be quite complex and mysterious. It is the lack of consensus on the laws governing cryptocurrency that has made the bankruptcy proceedings very difficult. The volatility of cryptocurrencies and the inability to determine insolvency outcomes has led to this.
Mr. Gox’s $460 million disaster
The world’s largest Bitcoin exchange seemed to be a remarkable example of entrepreneurship but according to the inside sources, it was dealt with neglect, poor management, and inexperience of the people controlling it. In 2014, the company lost $460 million dollars to hackers and another $27.4 million went missing from its account.
This was the second time when people had lost their crypto assets; the first time being in 2011 when hackers lifted around $8.75 million. Mark Kerpeles, CEO of the company and a computer coder himself, had nothing to say except to feel extremely sorry for the loss of the people involved.
A trustee was appointed to make the recovery in USD and pay back the customers who lost their money during the breach. In the end, the trustee was left with 165,000 Bitcoins and after the customers have been repaid, the remaining assets will go to Kerpeles. This problematic bankruptcy payout was the reason that customers are still trying to bail themselves out of it.
Cryptopia reaching the U.S. bankruptcy courts
Why did an insolvent New Zealand crypto exchange reach the federal courts of New York City? The combination of a U.S hosted database and international clientele got the company a Chapter 15 bankruptcy proceeding.
This New Zealand-based digital exchange company consisted of millions of account holders who traded various different types of digital assets. The company suffered an attack earlier this year and lost $16 million worth of crypto and other digital assets with none of it recovered till date.
On May 14th, the company was put into ‘liquidation’ which is similar to bankruptcy as the company sells its remaining assets to pay back the account holders who have faced the loss. bankruptcy provides you with certain benefits as the court may take action to protect the company’s properties. Thus, we get the top reason why the company moved to the U.S for foreign proceedings.
The fundamental issue which is faced in insolvency proceedings is whether the crypto-assets form a part of an insolvent estate. The issue was raised in the personal bankruptcy of Mr. Tsarkov where the Moscow court passed the orders that these assets cannot be ignored because of their massive value.
Until more laws are introduced to govern the financial usage of crypto assets, there are bleak chances that bankruptcy cases will be resolved without any complexities involved.
(Featured image by DepositPhotos)
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
Qualitime Plans to Reach a Turnover of €11 Million in 2026
At the moment, Qualitime application has 1,800 registered visitors from the main laboratories in the country and about 400 health...
Peruvian Mining Companies Urged to Focus on Redouble ESG Certification Efforts
Experts recently said that the ESG certification of mining companies with operations in Peru will become increasingly important. They also...
Safeguarding Your Business Funds in Periods of Economic Uncertainty
The dust hasn’t yet settled from the 2023 banking crisis, and another closure could very well be right around the...
Audax, a Low-Risk ESG Company According to Morningstar Sustainalytics ESG Rating
In summary, Audax has demonstrated its leadership in sustainability and ESG performance by earning an "ESG Low-Risk Company" rating from...
VR Bank Bamberg-Forchheim Celebrates Seven Successful Crowdfunding Projects
The VR Bank Bamberg-Forchheim eG not only initiates and maintains the online platform, but also acts as a donor. Because...
Impact Investing1 week ago
Rooftop Solar Photovoltaic Market to Reach $84.2 Billion by 2030
Fintech2 weeks ago
The Turnaround in Interest Rate Will Create Winners and Losers in the Fintech Sector
Cannabis4 days ago
UN Report Calls on Member States to Stop Criminalizing Drug Users
Impact Investing2 weeks ago
Eco Lab Exceeds Minimum Goal in its Equity Crowdfunding Round