Bankruptcy filings in the digital asset space continue, as cryptocurrency exchange Bittrex filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Monday, May 8, 2023. The Bankruptcy Docket can be found here. Desolation Holdings LLC and its affiliated debtors, Bittrex, Inc., Bittrex Malta Holdings Ltd., and Bittrex Mala Ltd., as debtors and debtors in possession (“Bittrex US”) filed their chapter 11 petitions alongside a plan of liquidation. Unlike other exchanges that have sought to reorganize in fits and starts, Bittrex US heads directly to liquidation. Activities outside of the US, including Bittrex Global, shall continue uninterrupted by the filing.Continue Reading Bittrex: Regulatory Enforcement and Macroeconomic Headwinds Lead to Another Crypto Bankruptcy
First Insider Trading Conviction Against NFT Insider
On May 3, 2023, Nathaniel Chastain, the former product manager of the NFT marketplace OpenSea, was convicted by a federal jury in the Southern District of New York for what is being called the first insider trading conviction in the digital asset space. Continue Reading First Insider Trading Conviction Against NFT Insider
Cryptocurrency Account Security
Crypto-hacking and theft have been front and center in the news. Separate from the failures and alleged fraud of CeFi crypto-exchanges, estimates suggest that $3.8 billion worth of cryptocurrencies have been stolen in the past year. It’s become vital to understand how to proceed when these situations arise.
Crowell & Moring has been working with clients to address such situations and has been involved in the tracking and tracing of over 30M USD of stolen cryptocurrency funds. Working with domestic and foreign law enforcement, we have investigated remote access fraud, Ponzi schemes, and numerous pig butchering scams. Many of these frauds are cautionary tales that can ensnare highly sophisticated organizations and persons. Continue Reading Cryptocurrency Account Security
ISDA Digital Asset Definitions
Following many months of discussion and review by a working group of traditional finance institutions and crypto-native exchanges and platforms led by the International Swaps and Derivatives Association, Inc. (“ISDA”), ISDA published the Digital Asset Derivatives Definitions (the “Definitions”) on January 26, 2023 for use with Bitcoin (BTC) and Ether (ETH)
Genesis’ Race to the Finish Line
Genesis Global’s Chapter 11 filing on January 20th was little surprise to those closely following the cryptocurrency markets and after its decision to “pause” withdrawals in mid-November. Digital Currency Group, Inc. (“DCG”), the parent of Genesis Global Holdco LLC (“Genesis”) and its largest borrower, is not part of the bankruptcy case and instead may
Earn Accounts are Property of the Estate: Celsius Update
Earlier this month, the SDNY Bankruptcy Court answered one of the gating questions at the center of Celsius Network’s Chapter 11 bankruptcy regarding the ownership of the approximately $4.2 billion in crypto assets. Celsius account holders had been demanding the return on their crypto deposits in interest-bearing accounts (“Earn Accounts”), while Celsius debtors asserted that
FTX Contagion – BlockFi Follows FTX and Others Into Bankruptcy
BlockFi Inc. and eight of its affiliates followed the paths of crypto platforms Voyager, Celsius and FTX by filing for bankruptcy protection. The case, commenced in the District of New Jersey, on November 28, 2022, is off to a fast start. BlockFi filed a plan of reorganization on the first day of its case. The
Crypto Commingling: Celsius Examiner files Initial Report
Shoba Pillay, the Examiner appointed in Celsius’ bankruptcy cases, filed her interim report on November 19, 2022. The Celsius Examiner’s report provides some important insight into a crypto-exchange’s operational and risk management failures which may provide investors and creditors some insight into what to expect in FTX.
The initial report provides important insight on the
Blockchain Analysis by Chainalysis
Crowell’s Crypto Digest asked Chainalysis, Inc., the world’s first and largest blockchain analytics provider, to give us a brief overview of the transformative compliance and investigation tools they can provide to financial institutions and legal counsel. The following post was graciously prepared by the Chainalysis team. Crowell & Moring is both a user of
Legal Issues for Institutional Investors of FTX
FTX has warned its investors, customers and the crypto-world that they may have to file for bankruptcy protection without rescue financing to address its immediate liquidity crisis. Unlike the bankruptcy cases of Celsius and Voyager, FTX’s case, should it file, will likely involve many institutional investors with secured and unsecured claims. These institutional investors